1. Yes, although 2000 is not as optimized as 2003. Your also need to
verify the system BIOS has implemented hyperthreading properly where
physical CPU's are presented before virtual CPU's since 2000 can't
differeniate between the two types. 2003 understands the concepts of
hyperthreading and knows between physical and virtual CPU's.
2. Depends on your environment and particular needs, but I would
recommend having at least SP3 if you can't use SP4. You'll need to test
it yourself to determine if it fixes or breaks anything you use.