What is the difference between a hardware raid and software raid with Red Hat Linux?

Hardware RAID uses a seperate card with a CPU which will do all the processing of data between the disks. Whereas, Software RAID is done with software, and uses your main CPU to process the data.

Hardware is faster, but by how much depends on the card.

would you notice a big difference in the two if a harddrive were to fail?

i admin. a backup server that uses vinum (freebsd) ... it works well enough, but if you can afford to, go w/ the hardware raid. it'll give you far less headaches!