Hi Michael,
Installing Office 2008 on Lion worked for me, with a couple of hiccups. the process I used was:
1) Installed Office 2008 from an installer image like yours, from Dec 1st 2007 it is office version 12.0.0 (that installed without an issue or requesting to install Rosetta)
2) AutoUpdate launched automatically (like it normally does) and found "autoupdate 2.0" that it wanted to install, but couldn't. Which is normal for this update.
3) located Autoupdate 2.1.1 from the MS Site and downloaded it.
4) tried to run that 2.1.1 Autoupdate, but it wouldn't run, saying that it is a PPC Program and couldn't launch
5) then I installed Office 2008 Update 12.1.0 (which I already had as a separate download), it installed without a problem.
6) then I installed Office 2008 Update 12.2.6 (which I already had as a separate download), it installed without a problem.
7) then I launched Word and asked it to Check for Updates. it found Autoupdate 2.3.3, which it downloaded and installed without an issue.
8) then I launched Word and asked it to Check for Updates. it found Office 2008 12.3.1 update, which it downloaded and installed without an issue.
9) then I restarted
10) After restart, launched Word and asked it to Check for Updates. it found Autoupdate 2.2.7 (it reported an error, basically saying that Autoupdate 2.2.7 was not installed), but it downloaded and installed it without an issue.
11) Restarted again
12) launched Word and asked it to Check for Updates, it said there were no more updates available.
so, you are right, Office 2008 is able to be installed on a fresh install of Lion on a brand new MBP 2GHz (even the 1st version of the Installer). So, for anyone else out there trying to install Office 2008 on Lion, this is the process that worked for me.
Just wanted to pass this along.
Kalagan