My backup device is a USB 2.0 250 MB Iomega Hard Drive.I'd like to put
it in my garage, requiring about 20 to 25 feet of wire. The official
USB specs say 5 meters max; if further use a hub/repeater.

I'm wondering how realistic the 5 meter spec is. I recall that parallel
printer cables were supposed to be limited to 10 feet or so; 75 foot
cables worked just fine. Same thing with the specs for RS-232 cables.

Does anyone have any real world experience with long USB 2.0 cables?
I'm thinking of building mine using unshielded CAT5 cable, one twisted
pair for power, another for data. Wise? foolish?

Yes brother i am also using USB drive with 1 mtr long cable.Main reason is that for using it i can easily plug and play it. thanks