I have a MacBook Pro (250GB with about 100GB free). I'm planning to get an external hard drive (1 TB). Is it possible to use the external hard drive for both time machine's purposes and as a general storage device (for movies and games)?
Yes, That is exactly what I have done.
The important thing to be aware of is that Time Machine will try to manage itself using all of the volume it is on.
What you need to do is decide how large a TM you need to hold your data together with old versions of it. Then partition the disk using Disk Utility so the TM is on one partition and the movies etc are on the other.