Word 2003 saves as .doc, just like all Word revisions have, but just as Word 97 couldn't open Word 2000 or Word XP files, Word 2000 or XP can't open 2003 .doc files.
The .doc file format has an invisible header with information about the file; author, date, etc. It also includes information about what Word it was created in.
That's why Word knows "This document was created with a later version of Microsoft Word".
It's a travesty that O2K4 for the Mac wont be capable of reading the encrypted XML files created by O2K3 - it means the end of cross-platform word processing, so far as any executive is concerned. Worse still, Microsoft's new .doc format remains proprietary and patented, so Apple can't even write their own document program that can decrypt Microsoft's XML file, even if they work out the encryption algorithm themselves.
It's not looking good for Mac users - not good at all.
To be forced to save-down your files to share with Macs is to get into the mindset that PCs are more advanced than their Mac counterparts - that the NEWEST Mac programs still don't beat year-old PC technology.