customizing exchange NDR

Non-delivery reports (NDRs) in Microsoft Exchange return information to a user about undeliverable mail or mail errors. NDRs are not specific to Exchange; many mail systems use them. While they do follow a basic format, there are many local customizations available for NDRs.
If Exchange is used to send an e-mail to an external domain, and that domain's mail agent is configured to return a custom NDR, the Exchange user who retrieves his mail through MAPI may find that the custom NDR is not preserved when Exchange returns the error. Instead, the user receives a standard Exchange NDR, rather than the other domain's NDR format.

This can be a problem since custom NDRs returned by other domains may contain debugging or troubleshooting information about the mail failure, such as where the failure occurred or detailed error logging information. When MAPI is used, Exchange's NDR does not preserve this information if it's relayed through another domain's NDR. (The custom NDR is preserved if the user retrieves his mail through POP3, for instance.)

Exchange 2000 has a hot fix available to address this problem, found here http://support.microsoft.com/default.aspx?kbid=824282. Once installed, the administrator also needs to edit the Registry. Open the key HKEY_LOCAL_MACHINE\SYSTEM\CurrentControlSet\Services\MSExchangeIS\ParametersSystem\InternetContent, add or edit the DWORD key RenderDSNsAsMessages, and set it to 1. With Exchange 2003, all you need to do is edit the Registry as described.

Remember that after this change is applied, the origin of the NDRs will be the friendly name of the user, not "System Administrator," as it typically is in the standardized Exchange NDR. The undeliverable message is included as an attachment.

And you aren't going to be able to prevent the user seeing what domain rejected mail. that is simply how DNS works.

Point value changed by question poster.