I don't think you can do it - except perhaps with the notorious SendKeys.
There doesn't seem to be much information about exactly how watermarking in
Word 2003 works but it does use what you call the old trick of adding a
graphic to each header so you have it whether you like it or not - but
there's no reason for it to cause a problem normally. If you're doing this
in code, there's no reason why you shouldn't either add the graphics
yourself or manipulate the ones added by the dialog after they've been
added.