I use Word 2002 (10.5815.4219)SP-2. I am setting up a letter template
for use with printed letter head paper. I wish to start my first
paragraph in the document ("Dear xxxx") 8 cm down the page.

I do not wish to use carriage returns to artificially create space
(because a user will be able to delete such formatting and corrupt the
overall layout)

I do not wish to adjust the page top margin, because this will impact
on continuation sheets.

I have tried inserting a value in format > paragraph > space before,
but this has no effect on the first paragraph of the document

How may I achieve what I want?

Hi  furrowedbrow,

Ok, I think setting a "section" will easily do the trick for you.
You'll create a section at the top of the first page, set it to be 8cm
in length, and that's it, the rest of the document will be unaffected.

1) Have your cursor at the beginning of where you want to create the 8cm margin.

2) Go to Insert / Break / Section Break Types:  "Continuous" / Ok

3) Go to File / Page Setup / Top: 8cm / Apply to: "This Section" / Ok

Tutorial: Using  sections in Word:
"Word uses section breaks to specify parts of a document that have
different page orientation, columns, or headers and footers. Section
breaks allow the user to specify where the different formatting will
begin and end. You might use section breaks in the following
circumstances:"
"Different margins. If the first page of a letter needs a two-inch
margin, and the following pages need a different margin, you'll need a
section break in the document."
http://www.addbalance.com/usersguide/sections.htm#sections

Understanding Sections:
"The way Word handles such mid-document page formatting changes is
through the use of sections. A section is a portion of a document to
which a certain set of page formatting properties should be applied.
If you find yourself with the need to change anything having to do
with page layout, simply create a new section and change the
formatting for that section alone."
"Select the type of section break you want, then click on OK. The
section break is inserted, and you can format the new section (or old)
as you desire. You can always tell which section you are in by looking
at the status bar. Just to the left of the Page number is the notation
Sec 1. This means you are in section 1 of your document. If the
notation is Sec 3, you are in section 3. (You get the idea--you can
have as many sections as you need in your document.)"
http://wtonline.vitalnews.com/Free/Tip0907.html

AutoTools: Margins & Breaks:
http://www.jegsworks.com/Lessons/words/autotools/margins.htm 

Creating Sections:
Word 97 Break dialog boxTo create a section, you must create a section break:
       1. Click where you want the new section to begin.
       2. From the Insert menu, select Break to bring up the Break dialog box.
       3. In the Section Breaks area, press the button corresponding
to where you want the new section to start:
           Next Page, Continuous, Even Page, or Odd Page.
"Even Page begins the new section on a left-hand page, and Odd Page
begins it on a right-hand page. Continuous begins the new section on
the same page. Once a break creates a section, you can then format the
section. The formatting is inherited until it is changed in subsequent
sections.
Changing the Section's Page Setup:
Once you create a section, you can adjust the page setup for it. Click
in the section, and from the File menu, choose Page Setup. You can use
different tabs to make changes to the section without changing the
rest of your document. For example, select the Layout tab. If need be,
you can change the Section Start you specified when you created the
section break originally. You can also select the Vertical Alignment
for the section: Top aligns the text at the top margin; Center, of
course, centers the text between the top and bottom margin, and
Justified aligns the first paragraph with the top margin and the last
paragraph with the bottom margin."
http://www.meredith.edu/techserv/helpdocs/word_97-2000_papers_and_reports.htm#Heading22

I'm glad to be able to assist you with this. If you have any questions
or if I misunderstood your question, please post a clarification
request before closing/rating my answer and I'll be happy to reply.

Thank you,
hummer

Google Search Terms Used:

word 2000 "section breaks"

Using sections might affect section and page numbering elsewhere in
the document. Another approach might be to use a blank Header (in
Headers and Footers) of the right dimension on the first page, and
setting Use Different Headers/Footers on First Page.

Owain

Okay- this may seem really really silly--- but...

It sounds like you were totally on the right track with the "space
before" setting- Have you tried setting up a paragraph style for that
first paragraph with a style name like "letterhead hello" and
assigning "normal" or whatever as the style to follow?  In the
format/style you'd click on new- then choose to make a new paragraph
style (very important, NOT character)- there's a dropdown at the
bottom, choose paragraph and in the "space before" area you can
specify 8cm or 226.8pt for the, well, space before that first line. 
All subsequent lines will have normal leading.  And, if you specify
"normal" or whichever style you're using as the style to follow, it'll
be completely transparent.
Once you're done creating the new style with all the space before,
make sure to check off the "add to template" option, so it's available
in all of Word.  (Word's got some application/document specific quirks
that drive some geeks nuts...)

Okay- that was a bad and rushed description on what to do--- taking a
page from the kindly expert's book, I googled |word 2000 "format
styles"| and found this tutorial on it:
http://www.rdg.ac.uk/ITS/Topic/WordProc/WoP2Ksty01/

To ease distribution, set your style to "letterhead hello" on a blank
page and then save the document as a document template (.dot)- share
this .dot file with all the other users that will be working with this
letterhead by putting it in the folder with all their other .dot
files...  (depending on installatio of Office, this folder can be in
several different places, sorry I can't be more specific.)

Of course, you can do like the kind expert suggested and work with
sections, but I've honestly had too many issues with page numbers
getting funky and printout issues coming up because of it...  Granted,
I mostly work with MacOSX at the office, so it could just be a quirk
of that, but I'm frankly not a fan of sectioning a document unless
your writing tomes or large legal briefs or things that SHOULD
logically have separate sections...  Just my .02 on that one.

Good luck, and please keep us posted on your progress...

-moose