An updated DefOpenAL32.dll (v0.9.9.1) fixing spatialization issues with the default software mixer can be downloaded here. The file belongs in the UT2003/System folder.
I want to specifically thank Nick Borrelli, Christopher Linder, Daniel Peacock, Carlo Vogelsang & Johnathan Wendel for bringing the problems to my attention & help getting them fixed. Thanks guys!
It's worth noting that if you're using a Soundcard which provides it's own OpenAL Driver, e.g. Live!, Audigy, Audigy 2 & nForce, then there's no need to download this, & you can wait for the next(?) UT 2003 patch instead.