I was thinking a file by file copy - maybe the Rsync method initially - a file by file copy.
I am already using snapshots on pool 1. Is the suggestion that those snapshots get replicated onto pool2? Is that better/safer?
EDIT: Will the replication task work on the same system? I have one physical box with 8x6tb drives as pool1, and 6x2tb drives as pool2. Right now my data size will still work using pool2 as a backup. Am I better off moving that data to another physical box vs using a separate pool?
That is what is being suggested by @Mlovelace and @Ericloewe. It has the major benefit of being able to preserve the entire file system structure (multiple potentially nested datasets), where rsync can only replicate files and folders. Safety is a somewhat different issue.
Replicating to another box avoids the risk of physical loss or destruction of one box taking both pools. It's up to you to decide if that's a risk you need/want to mitigate.
In theory, if it meets the minimum requirements (and your backup storage capacity needs), it should be OK. Others are definitely using the N40L with FreeNAS. I suggest a forum search for N40L to see what kind of experiences people have with it.