Open Office is an excellent alternative and almost completely compatible, but you will have the same Save As questions since you will want to save in Word format for the same reasons you stated in your message. I found some lack of compatibility saving check boxes in forms.
As to the other part, MS probably added some functionality in 2003. That's not a bad thing since we want our programs to get better over time, but it might cause an issue with very old programs. I used to run Office 2000 all the time without any problems, so this might be a non-issue.