I haven't done any replication yet, so this is entirely based on the documentation, but it looks like none of the answers are correct. From the linked document:
For all types of replication, the Distributor version must be no earlier than the Publisher version. (Frequently, the Distributor is the same instance as the Publisher.)
For transactional replication, a Subscriber to a transactional publication can be any version within two versions of the Publisher version. For example, a SQL Server 2000 Publisher can have SQL Server 2008 Subscribers, and a SQL Server 2008 Publisher can have SQL Server 2000 Subscribers.
So, according to the documentation, you could have a publisher which is SQL Server 2000, a distributor which is SQL Server 2005, and a subscriber which is SQL Server 2008.
The distributor is (A) not the same version as the publisher, (B) not the highest version level in the configuration, and (C) not the same level as the publisher or subscriber.