Raid 5 3 disks rebuilding

You should be able to, although you should be aware that during the rebuild there is increase risk to the array failing if any other disk fails.  Therefore I would make a full backup first (to a destination not part of the array) if at all possible.

You also should check your manual to see if there is any particular warnings.

Finally, this will not increase the size of the array.  Your array will only use 500GB from the 1TB until all 3 disks are upgraded to the larger size.

I would ask - what is the purpose of doing this?
You are going to trash 500GB of usable space if you keep one 500GB HDD there and replace two only.
Better if you get three 1TB drives - take full backup of your current configuration and then rebuild RAID with new drives - perform restore.

It is rather dangerous to do it that way, as the rebuild can kill your array, and even if it works, it will take a lot of time (during which your data is at risk, and the server runs slowly). Besides, after having replaced all the disks you'd still have to expand the array (or create a separate volume for your added space), and such things can always fail or not be supported by your controller.

It is far better and safer to backup, remove the old disks, insert the new ones, create the new array(s) and restore.

Also make sure the disks you bought are certified by HP to work for your server, and have the correct firmware. They need to be enterprise class disks.

The disks are genuine, thanks for all the advice.

@noxcho sorry I failed to mention that the customer I believe can only afford 2 disks at the moment because they're about £200 + per disk.

We will probably go for the restore option, I just needed to know if it was possible.

Many Thanks for the help

I will let you guys know how it goes.