Apple today released Security Update 2004-10-27 which is intended to correct an issue with Apple Remote Desktop Client 1.2.4 with Mac OS X 10.3.x:

Impact: An application can be started behind the loginwindow and it will run as root.
Description: For a system with these following conditions
- Apple Remote Desktop client installed
- A user on the client system has been enabled with the Open and quit applications privilege
- The username and password of the ARD user is known
- Fast user switching has been enabled
- A user is logged in, and loginwindow is active via Fast User Switching

If the Apple Remote Desktop Administrator application on another system is used to start a GUI application on the client, then the GUI application would run as root behind the loginwindow. This update prevents Apple Remote Desktop from launching applications when the loginwindow is active. This security enhancement is also present in Apple Remote Desktop v2.1. This issue does not affect systems prior to Mac OS X 10.3.

More info here.