Raise Domain & forest functional level to Windows 2003 with Exchange 2000

I have upgraded all my DC's to Windows 2003 SP2(some of them are on R2). My existing domain level is Windows 2000 Native mode & I have Exchange 2000 which is running under Exchange 2000 Native mode. I am in preparation of moving to Exchange 2007. I would like to raise the domain & forest functional levels from Windows 2000 Native mode to Windows 2003 mode before installing the first Exchange 2007. Can I just proceed or do I need to do some adprep, domainprep, forestprep, etc.
What is the best recommendated approach for me. Deploy Exchange 2007 and move all the mailboxes and then upgrade domain & forest funtional levels. Or first move to Windows 2003 mode and then proceed with Exchange 2007?
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The Domain and Forest Functional Levels will not affect your Exchange Server in any way. They merely dictate what version of Operating System your Domain Controllers can run, and Exchange 2007 should be able to install in anything from Windows Server 2000 Native Mode and upwards. Since you have no 2000 DCs, and assuming you have no intention to have any in the future, you could push both levels up to the Windows Server 2003 level.

You would be quite safe in raising the functional level of your domain and forest to the Windows Server 2003 level. It has no effect on Exchange 2000 or Exchange 2007, but if you don't feel as if you can, the Windows Server 2000 Native Mode is the minimum required by Exchange 2007 to install. Native Mode is required since Mixed Mode supports NT4 DCs, and Exchange 2007 does not support NT4; by running Native Mode, you are affirming to Exchange 2007 setup you no longer have NT4 DCs on the network.

By having all Server 2003 DCs, provided they all have the latest service packs (or at least service pack 1) you meet the minimum requirements for installing Exchange 2007.


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jzaveriAuthor Commented:
If I do not run some of my Windows 2003 DC's without R2, is my AD going to get the beneifts of R2 enhanced replications, etc.

It depends which features you are using as part of R2, but I'd say for the most part the majority, if not all, of the R2 feature set depends on which servers the feature is being used with, and whether such servers are running R2 or not. Take an example - the new improved DFS Replication features in R2 will work between two or more R2 edition servers without batting an eyelid at the functional levels.

jzaveriAuthor Commented:
Is it mandatory to execute Setup.com /PrepareLegacyExchangePermissions during or before installing CAS.

Yes, you must run setup /preparelegacyexchangepermissions since you have an Exchange 2000 Server already on the domain. If you want that one to work after Exchange 2007 is installed (even just during the transition period), you must run this command. See http://technet.microsoft.com/en-us/library/aa997914.aspx.

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