I'm looking for the best way to sync lots of files (4TB worth) from one machine to the other. What is the best way of doing this?

I'm currently considering rsync over ssh and rsync via an rsync server.

I expect the rsync with dedicated server to be much faster, but there is another question: Is it faster to have the rsync server on the machine hosting the files and have the emtpy machine pull the files or is it faster to have the rsync server on the empty machine and have the full machine push the files?

1 more question: Does standard rsync with an rsync server send usernames/passwords in plaintext or encrypted? I am guessing that the contents of the transfer are plaintext.

I've always used rsync over ssh and never really had any problems in terms of performance. I would just schedule the jobs to run at 2am. I've never actually heard of an rsync "server", but rsync over ssh using public key authentication works great.