Do I need to use AA batteries when I hook up the external battery to my camera?

You don't need to use AA batteries in the camera if you connect the external power source to the camera. However, using 4 batteries (2 in the top bay, 2 in the bottom bay, preferably on the left side), makes it easier to set up the camera, test it, and turn it on because the camera has power even with the external power unplugged, especially if you are using the old-style case that you can't open or close with the external power plugged in.

After you finish programming the camera, unplug the power cable, turn the camera to On, close the housing, and then plug the power cable back to the camera. You should see the green light flash in front of the camera which means the camera is in the arming process. 

The new "2" case can be opened and closed with external power plugged in so you can easily set up and test the camera without needing internal batteries.

When you connect the external battery to the cameras, we highly recommend you to use a voltage regulator to prevent the voltage higher than the specified voltage to supply to the camera.