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I know the general answer to that question is a big NO... However, I think my usage scenario is somewhat different to a typical AD + Exchange deployment. I'm planning on running a mail server for myself (max of 5-6 inboxes). So the DC is not going to be handling virtually any authentication traffic apart from the one generated by Exchange.

To answer a likely follow-up question - yes I know Exchange in this scenario is a bit of an overkill, but I have my reasons for wanting this setup. Push on iDevices and fact that I like the interface to name the main ones.

So, the question to experienced lot out there is how big of a problem might I run into by doing what I want to do?

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There shoudn't be any problems with you running Exchange on a DC. While it's not a "best practice", it's entirely feasible, and quite common.

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I agree. In fact, I've seen it many times on small business servers. – Paul Ackerman Dec 8 '11 at 21:02
@Paul - Small Business Server is engineered in such a way that the problems you normally have installing Exchange on a DC don't happen. In "normal" windows it can be a bit erratic. – Ben Pilbrow Dec 8 '11 at 21:50
@Ben Yeah - I knew there was a reason that option was "recommended" but I wasn't (and still am not) sure exactly why. – Paul Ackerman Dec 8 '11 at 21:59
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The only thing I ever found out is that it's "not recommended" by Microsoft, but there isn't a concrete answer as to why not. The only theory I have is that Active Directory and Exchange both use the same type of database (ISAM, different than SQL) and there is the possibility of file corruption. As long as all databases, logs and SYSVOL are stored on different drives (or at least different partiions) you will be safe.

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It's because the Exchange services depend on AD. There's a chance the Exchange services will attempt to start before Active Directory and fail to start. It's nothing to do with the DB engine (Jet Blue, I think) - that's rock solid. – Ben Pilbrow Dec 8 '11 at 20:39

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