well in this case you better setup a new forest of the same name , and migrate all your servers to the new domain , you can try to upgrade, but later on you will encounter many problems,
the simplest and easy way is to implement the new insfratructure and migrate all the users to the
new domain. and yes when you install server 2003 the the default operational level is : 2000 mixed mode. you can raise them but cannot revert back !