We have MS Office 2007 and want to create Word documents in the Office Live Workspace that others are able to edit. Do our fellow collaborators also need the latest version of Word?

 
I see where at least Office 2002 is necessary to use OLW. But, do all participants need the same program version and/or is it the case that any shared documents must be saved in the "lowest common denominator" version?

 It's raining in Maine today! Jim
 

Your collaborators don't need Office at all if all they need to do is view the documents.

If they need to edit documents, then they can use any version of Office with any version of the file, but they will need to install the Microsoft Office Compatibility Pack to edit Office 2007 file formats in older versions of Office. If they can't install that compatitibility pack, then yes, you would need to save the file in the lowest common denominator version.

Hope that helps!