I didn't have much to dig into it since I need to use SQL 2008 right away. So I tried to change default SQL instance to SQL 2008. Of course this is not recommended by Microsoft and never will be. Please note this is only to change default instance location and does not uninstall SQL 2000, which should be done later seperately.
The steps are:
1) Stop SQL Server and SQL Agent services
2) To change default instance location, I did change the ImagePath of the following registry.
Old path pointed to SQL 2000 and I changed it to:
C:\Program Files\Microsoft SQL Server\MSSQL10.MSSQLSERVER\MSSQL\Binn\sqlservr.exe
3) To change default SQL agent instance, I also change this registry:
Old path pointed to SQL Agent 2000 path and changed to :
C:\Program Files\Microsoft SQL Server\MSSQL10.MSSQLSERVER\MSSQL\Binn\sqlagent.exe
4) Start SQL Server and SQL Agent services.
It worked for me, but might not work for you. I am documenting this for my future reference :-)