I'm attempting to integrate a Snow Leopard server and a number of client machines into my AD network and I'm wondering if I can update the schema on a DC running Server 2003 (NOT R2) to support mac systems? Or do I need R2?
Why do you think you need to update the schema at all to support mac clients? I've got several clients bound perfectly happily to a Windows 2003-based AD and have had this working since OS X 10.3 days without too much bother and certainly with no schema extensions.
You can bind a mac client (or server for that matter) to AD without needing to do anything special - you only need to change the AD schema if you are trying to solve a specific additional problem that specifically requires a schema extension...
On a mac go to system preferences, accounts, login options, find network account server and click 'join', type in the FQDN of the Windows domain you are joining (e.g. 'internal.mydomain.com', not 'domain_controller.internal.mydomain.com') and if that fails then your problem is not because you haven't extended the schema.