Picasa stores very large files in Application Support folder which consumes limited disk space in system disk. I wonder if I can use symbolic links in order to make Picasa use removable disk as storage space.
Whilst I have no experience with Picasa, I have symlinked many other apps' Application Support folders to other destinations including network drives too without any problems. I ensure the drive is connected with a script before allowing the app to open, but I'm not sure if that's necessary. Generally speaking, it'll work fine.
Edited from my canonical linking answer at How can I create a symbolic link in Terminal?