Follow-up:
Several people have reported the same problem at MacOSX Hints. Some found that the problem occurred when downloading MacOSXUpdateCombo10.2.8.dmg with Safari. The dmg could not be mounted and DiskCopy failed to verify the dmg. However a few had no problems mounting after downloading with Explorer. However, when I downloaded with Explorer (v 5.2.3), the dmg failed to mount because of verification failure.
As noted at MocOSX Hints, the problem can be side-stepped by turning off verification in the Disk Copy Preferences. Both versions, the iCab and IE, that I downloaded mount with verification turned off. Not sure if I will use the updater.