<p>What happens when the Office 2003 PIA prerequisite and launch condition in a Windows installer are run against an Office 2007 system?</p>

I believe the 2003 PIA require Office 2003 be installed (so I'm guessing it would fail). AFAIK, the 2003 interops won't work with the 2007 applications. More information about these types of scenarios can be found
here
. So even if it did install (pretty easy to test) you might not have a working application.
Are you trying to get some 2003 Add-ins to work with Office 2007?