Well, just let everyone know.. I upgraded my HD from 1TB to 2TB and had a hard time expanding my bundle as well... at the end.. I just logged into the CIFS of my NAS drive, go to the hidden .timemachine folder, and manually delete the bundle files inside to free up the room I needed. I used the shell to do it cause its easier, but you can do it in finder too, you just need to know the path.
I have the ReadyNas Duo. The deletion of the bundle took a LONG time. 700 gig took a little over a day. Just deletion... I don't know why it took so long. But after all that hard drive space is free, my config of Time Machine in the ReadyNas setting page is now also freed up. And now I can use the extra space of the HD. (FYI, I did install the new drives 1 by one first and let the NAS do a sync on the 2 new 2TB drive one by one first).
After I set the new setting of the Time machine, I started rebackup my whole system again.. About 4 - 500TB of data, took about a day. And that is with Jumbo Frame on for all devices (MacPro, Router, and NAS). Average from what I can tell is about 11.5 Mb/s. Somehow, my NAS didn't run at gigabit speed... even though everything on my system is.. probably cause one or more input device into the router isn't...
Anyway, hope this info helps someone. I wish I didn't have to do this to get the free space back.. but don't know any other way to utilize the new HD space.