Yes, you can physically copy two folders from C: to H: and get a one-to-one match and the files are perfectly usable on either drive but that can NOT be done using Windows Back-up. I use a little program from Microsoft called SyncToy 2.1 to do this very thing; I do this manually but it is possible with some programming to
create a batch process and use the scheduler.
Using Windows Back-up advanced settings you can schedule it to back-up two additional folders to H: but then you will get all your settings plus those two folders from C: stored in one big lump in a single file on H: (it's one big file plus I think a little file or two to keep an index or something but it's nothing you can read on your own, it requires the Restore function to extract them).
Some people like to schedule a complete back-up weekly (all your settings and the data) plus set up incremental back-ups (just the data, for instance your two folders) daily but you can NOT do this with W7 Back-up. W7 back-up backs up everything selected, every time. Other products may provide this incremental feature.
NOTE: Typically you should not store the back-up file on the same physical drive you are backing up since the main purpose is disaster recovery and if the HD crashes you may have lost your original and your back-up. (So in your case make sure C: & H: are on two physically different drives.