Word XP offers the same annoyance. To stop Word from using right-margin balloons for comments and tracked changes, choose Tools » Options, and click the Track Changes tab. In Word 2003, choose "Never" in the "Use Balloons (Print and Web Layout)" drop-down list. In Word XP, uncheck the "Use balloons in Print and Web Layout" box. Word then displays each comment in a balloon when you hover the mouse pointer over the text to which it's connected, as in Word 2000.
If getting rid of the balloons altogether is too drastic, use the "Preferred width" setting on the Track Changes tab to reduce the amount of space Word uses for the balloons.
Shrink the Comment Window
If you add a comment in Normal view, Word opens an absurdly large comment window at the bottom of the screen. It takes up far too much screen real estate, even on my 19" monitor. To make matters worse, you can't close the window by clicking on an X. You have to go to the menu bar and find the option to close it.
As you say, Word does tend to display the Reviewing Pane at far too large a size. Drag its split bar to slim it down a bit. To close the Reviewing Pane quickly, drag its split bar all the way to the bottom of the screen, or simply double-click the split bar. You can also press Alt+Shift+C to close this pane (or any other pane except the task pane, which requires Ctrl+F1).