Quick question would be why are you setting up a new domain? The easiest would be to just add this new Exchange 2007 to your existing Exchange organization and then migrate everyone’s mailbox over.
If you plan on doing the new domain route, then you can create an inter-forest trust between them. Migrate mailboxes which would create new accounts (identical to previous accounts) in the new domain. I’ve seen this work with no problems but I have seen issues as well. Depending on how many mailboxes/users you are “recreating”, the migration process may take awhile. Definitely do them in phases. Create some brand new mailboxes on the old Exchange 2003 and then migrate those accounts over.