Exchange 2003 to Exchange 2007 Migration where Exchange 2003 is installed on a domain controller.

I have a customer who has Exchange Server 2003 (Standard SP1) installed on an aging domain controller running Windows Server 2003 SP1.  This server is maxed out on space, plus has a failed drive in its primary drive array.  The only other server is a newer domain controller running Windows Server 2003 R2 (SP2) and hosting file sharing and print services.  The newer server is the GC and holds all FSMO roles.  Active Directory is in 2003 Native Mode and Exchange is also in Native mode.  It is now time to upgrade Exchange Server to 2007, while eliminating the old server.

We have beautiful new server box ready for install.  We'd like to put Windows Server 2008 on it and make it a member server, then add Exchange 2007 and migrate the mailboxes from 2003 to 2007.  However, my concern is (as always), migrating an Exchange install from an existing domain controller to a member server, while needing to prepare the Active Directory for 2007.  In the past, when migrating Exchange 2000 (on a DC) to and Exchange 2007 server, I've had to use a member "swing" server to first upgrade to Exchange 2003, prep AD, then migrate to another server running Exchange 2007.  What is the best and easiest way to migrate given my current situation?

Is it possible to run the preps necessary for Exchange 2007 on the DC hosting the Exchange 2003 server, install Exchange 2007 on the new server, and then run the services, structural and mailbox migrations?   Or, do I have to setup a temporary member "swing" server, migrate everything to that, remove Exchange 2003 from the DC and then either demote that DC or run the 2007 preps?  Bottom line: Do I have to setup a swing server or can I prep a migrate directly given my current environment?

Any help you could give me would be greatly appreciated!  If you have an order of upgrade, including the setup /pl and other AD prep commands, that would be a definite bonus.  The existing domain controller will remain a Windows Server 2003 R2 server.  Would I be better off running Windows Server 2003 R2 on the new Exchange member server, or Windows Server 2008?