There's an option in the phptemplate engine that let's you specify the .tpl.php file to use for rendering. In the _phptemplate_variables function in the template.php file, set the value of $vars['template_files'] to the template you want for rendering. Your design will need a way to identify which template file to use, such as path. It's tersely documented here: http://drupal.org/node/104316.
Drupal 5 lets you define as many block regions as you'd need so you can create regions specifically for the alternate layout.
Basically, in simplest terms, what we'd like to achieve is to have one area of the site distinct from the rest with its own layout and blocks, possibly even the ability to have blocks anywhere including the center content section - however it would all need to be a single installation of drupal on the same domain if at all possible. I guess as a last resort it could be run under a different subdomain via the same installation (I think that is possible with Drupal?) something like http://myarea.thisdomain.com with the main site at http://www.thisdomain.com. I havent discussed that option with the project team though, just thinking out loud with that last point.
Can anyone point me in the right direction?