When we set up "Incoming Email" in MOSS 2007 from operation like this,
basically MOSS 2007 will run job-timer on specified time basis.
It will run every 1 minute, reading, parsing and uploading email body and attachment to the document library - then finally delete the original file. This is very handy OOB services from MOSS, however you should take some precautions before using this service.
1. Un-matched email message will be discarded
Windows Sharepoint Services Incoming E-mail job will continue to run all task without being notified if the email has been successfully uploaded (ie. match defined destination address) or not. So if somehow SMTP configuration put all email to that folder, then you'll lost any unmatched email message.
2. Web Administrator Application Pool should have delete rights
Since the job runs under app pool control, and it must delete the file afterwards. Then Web Administrator app pool should have delete rights. Otherwise, you'll get duplicates entry in document library.