replacing degraded drive on P4p800-e in Raid 1

I have a P4P800-e. I have two Seagate SATA 80 gig drives in a Raid 1
setup on the Intel 82801er controller. One of the drives failed, and I
have ordered two 250 gig Seagate SATA drives to replace both.

If I replace the failed drive with one of the new drives in Raid 1, I
understand that I will only see 80 gigs. If I allow it to rebuild, then
reboot with the second 250 gig drive, and allow a second rebuild, will I
then be able to use all 250 gigs, or will the new drives show as only 80
gigs?

On a side note, when one of the drives failed, my system would not boot,
and I had to restore from a back up. Why did the mirror not work?

Thanks for any help.

Edward