Bryce... You may be correct but I can't be sure...

From "Windows Server 2003 Environment Training Kit":
Quote:

Domain Local groups function as a local group on the domain controller while the domain is in mixed functional level.



But then it goes on to say:
Quote:

Have domainwide scope in Windows 2000 native and WIndows Server 2003 domain functional level domains, and can be used to grant resource permission on any Windows Server 2003 computer within, but not beyond, the domain in which the group exists.




Clear as mud yet?
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(... better days ahead)