Your password data is not transmitted over the network, since cryptographic operations are performed on your computer in the TrueCrypt driver. The password is used to obtain the key, which is used on your computer to decrypt the encrypted sectors sent over the network.
The TrueCrypt FAQ contains a section about this. I believe point 2 is what you want to achieve. Their warning is that someone who looks at encrypted traffic may receive information about side channels, such as the amount of data read and written, as well as the offset in the encrypted file.
If you do not want protection from your government or another well-funded attacker, I believe that you should be fine, taking into account the password. You can check what happens when a network failure occurs while writing a large file. This can damage the file system that you installed.