Create a Custom Site Definition - Link Dump

Intro: How to create your own custom site definition (Todd)
http://www.sharepointblogs.com/tbaginski/archive/2007/08/16/creating-a-custom-site-definition-in-wss-v3-moss.aspx

Creating a Site Definition from an Existing Site Definition (MSDN)
http://msdn2.microsoft.com/en-us/library/ms868598.aspx

and more generically Customizing Templates
http://msdn2.microsoft.com/en-us/library/aa151982.aspx

Creating a custom site collection that automatically creates subsites
http://suguk.org/blogs/sharepointhack/archive/2007/06/03/3595.aspx

Supported and Unsupported Scenarios:
http://support.microsoft.com/kb/898631

Basically, creating your own templates is supported, customizing the original templates is NOT supported.