Yes that's right. Windows 2000 terminal servers allowed 2000 and XP clients to connect using the built in CALS--no additional purchase was necessary for these clients. This was changed for 2003 terminal servers.
Some other things to remember that we get a lot of calls on: If you are running a 2003 terminal server in application mode, you MUST use a 2003 license server. So if you currently have 2000 terminal servers, and a 2000 license server and you decide to upgrade or add a 2003 TS, you must also upgrade the license server to 2003. 2003 license servers can give out both 2003 and 2000 CALS; 2000 license servers can only give out 2000 CALs...they do not know what 2003 CALs are.
In 2000, you had to put the license server on a domain controller. (There are ways around this, but thats another topic). In 2003, this is no longer a requirement, and you can now put the license server on any member server or domain controller.