1) For those who will be using Word 2000, save your document as a Word 2000 template (not simply a .dot file). Word 2000 does not use themes, so any fonts and colors you want have to be embedded in the template. The fonts and colours should be in the styles.

2) Themes are intended to allow a person to quickly change the look and feel of a document by changing a theme. Do you want your 2010 users to be able to do this with your template? I think not. To avoid this in the Word 2010 template will require (I think) use of custom styles not based on built-in styles with a formatting restriction to only use those styles. In any case, distributing the theme separately would be a real headache unless you are using installation software.

3) The setting for Automatically update styles from template should be turned off (unchecked).

Why are you using dummy text?

Consider instead using Macrobutton Fields or a UserForm. The latter requires that macros be enabled for your template. Macrobutton fields, despite the name, do not require macros. See Macrobutton Fields and Create a Simple Userform

In setting up your letter template, take a look at Setting Up Letter Templates, the sample Basic Letterhead Template and the Letterhead Textboxes and Styles Tutorial. Use of the StyleRef field in your continuation page header is important so that changes made in the body of the letter (like a name, date, or subject) are reflected in that header.

Colours are nice. Will all users be using colour printers? Have you discussed this with your customer?

Finally, unless there is some strong reason to do otherwise (like using content controls in Word 2010) I would distribute the template designed for Word 2000 to all users.