Thank you for your response gupnit, however none of the solutions provided actually solved my dilemma of the Exchange 2007 users not being able to send email externally through Exchange 2003. I ended up calling Microsoft for assistance.
From the EMC under Organization Configuration, Hub Transport, Send Connectors, no send connectors were listed. Creating SMTP send connectors here in the EMC resulted in E2K7 attempting to route mail externally, not through E2K3.
Microsofts resolution was to create a SMTP connector in ESM on the E2K3 system instead of the EMC on E2K7. Create a new SMTP Connector under First Administrative Group, First Routing Group, Connectors folder. When setting up the SMTP Connector, use the E2K3 server as the bridgehead, set the address space to SMTP, *, 1 and make it available to the entire organization. Then, from the command line, iisreset. This resolved my issue. The newly created SMTP Connector now appeared in the EMC on E2K7 and users on E2K7 were now able to send email externally.