Technically your server supports 16GB of RAM, thus it should be 64bit compatible.. However, being that it was a server created and began selling in 2002, and you yourself said purchased in 2003, it doesnt make much sense in upgrading it...
That said, VMware environments will always be a bit slower. My typical VM builds have dual quad cores, 32-64GB of RAM, two dual port NiC's, and two single port Fiber HBA's. Gosh the Xsigo virtual connect sounds really appealing right now... But I digress..
If I'm upgrading critical pieces of my infrastructure, I have to make sure that other dependencies are also factored in to the equation. aka, the backup infrastructure is evaluated for compliance, compatibility, and above all capacity.
A little trick I learned in negotiating with board members or the check writers... "How much is email worth to you? Can you be down with out it?" Explain why you cant protect the current application, and what is needed.
A cheaper alternative may be to just get BackupExec System Recovery 2010 for just your Exchange server. It'll be a one off, but if you really cant get a new server, this is about 5x cheaper.