SharePoint and Reporting Services

I have seen and understand the articles about how to configure one IIS to
host both SharePoint and Reporting Services.

Isn't it better to have a different machine host the Reporting Services - or
am I misunderstanding how RS works. Maybe all the number crunching and data
manipulation is handled through the data source connection on that server
and RS just displays it on the web? That would argue that having them both
on the same server isn't too much.

But in any case - if I did want them on seperate servers - can I do that?
Server1 has SharePoint referancing Webpart Reports that reside on Server2


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