well, let me see if I got this right...
You have a SMS server off domain that you want to use to deploy to your machines.
First, this can be a problem, simply for permissions. It's not advisable to use SMS2003 off domian, as the passwords and accoutns, with in domain are all managed, when off domain can be a mess. Also this would require you so use a heartbeat scan for clients, which means that if you are running a large number of machines, you will slow your network down. Additionally, you will need to run a loginscript like process to automate the sms install as doing it through discovery will be a problem (not 100%).
Also, dont' think of a domain as a bad thing. It's really not all the hard to set it up, and once it's up, you will be amazed at how easy it is to maintain and do things. AD is the simpilest domain structure that I have been able to work with, and it's a thousand times easier than NT was.
The Site thing is required for a good setup. Read through this posting for some more information too...