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Branch office Terminal Server with exchange 2003

We have a terminal server in a remote office in with maybe 5 clients using it.   As a way to decrease it maintenance using terminal server to deploy apps is much easier than maintaining a bunch of remote PC's.  However the age old question of outlook 2003/exchange 2003 comes into play whereby the users cannot use cached mode on the terminal server and rely heavily on a WAN/VPN infrastructure to connect to exchange in the head office.

Purchasing a seperate exchange server for this location is costly and requires maintenance etc.  But i was considering installing exchange standard edition right onto the terminal server to support the mailboxes for those clients.

Does anyone forsee a problem with this?  I will do some testing in our lab.  But does this sound like a good alternative to putting in a full blown exchange server into the remote location?
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KPCarl

Let's look at this totally differently. I would suggest having them use a terminal server in the head office. 5 Terminal server sessions will use very little bandwidth. I have many users on the West Coast connecting to terminal server here on the East Coast with very good performance.
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We tried that and its too slow.  The branch office is overseas so the latency and bandwidth are too high for that
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tim1731

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Not quite sure how a traffic shaper would help.  They are basically only doing email and file transfer in the branch office.  Unless there is a way to actually compress the data being sent over the WAN traffic shaping of only one type of data i think seems a little useless.
Have you considered RPC over HTTP on the clients? I don't have the bandwidth numbers, but I had a user try it on the West Coast, and she saw better performance than other users in the office using the normal RPC route. Just trying to bounce some ideas with you (not too many other responses). Hopefully someone can chime in that has some experience with these bandwidth/latency challenges.
I have implemented RPC over HTTP but only when users are travelling so they dont have to VPN in (hotels are notorious for blocking VPN these days).  Will consider for in-office clients to see if it makes much difference.  One problem i have with RPC over HTTP is that it always prompts for a password to connect when the log in which is super annoying since they have already authenticated.  (This problem is fixed on Outlook 2007 beta 2, but would be rather annoying for people who may be opening and closing outlook multiple times per day)
Please keep this open as it is still under investigation

I have taken a look at the products by Juniper and they look very promising.  However the price range is a bit on the high side and it seems the products are limited to certain low bandwidth.  Apparently a 512K WXC box is almost 10K, if i buy two of them, one for HO and one for the branch then im at the same price as an exchange server.  

Are there any competing products designed for exchange over the wan that i should be looking at?
We are testing out the Riverbed product.  Good price point for what it does and has a unique approach to MAPI acceleration.  I've only had it in for 2 days and its already proving extremely effective.
Also have a look at converged access (was sintera) years ago price is good