Actually Exchange 5.5 will work in 2003, just that they say its not a good idea since is doesn't use the AD and all the security features.
W2K will run with Exchange 2003 but about 75% of the features in Exchange will be turned off, since they aren't compatible.
W2K3 and Exchange 2K3 are the perfect tandem as per Microsoft!
There is a straight migration path from 5.5 to 2003, no intermediate steps. As for your clients the minimum Office software is 2K, 97 will not work (well)