Version: (using KDE 3.5.9) Installed from: Ubuntu Packages When creating a mail from an existing template, it gets two `subject:' headers, one from the template (i.e. the name of the template), and another one entered in the mail creation window. While KMail displays the (new) second subject, Outlook (at least the versions I used) displays the (old) first subject, so you'd have to change the name of the template to send a mail with a new subject.
I can't reproduce this with the KDE4 version, I tried the following steps: 1. Start the composer, enter some subject, and save that as a template 2. Click the templates folder, right-click the template and choose "New Message from Template". The composer then opens with the template 3. Change the subject 4. Save the message as draft 5. View the source of the draft message in the drafts folder The source did only have one subject. So either the steps to reproduce are different (if so, please provide them here!) or it doesn't happen anymore with the KDE4 version.
Using your steps, I can reproduce it under Hardy (KMail/1.9.9) but not under Gutsy (KMail/1.9.6 (enterprise 0.20070907.709405)), so it seems to be fixed in your KDE4 version.
Closing, as this seems to be fixed in the KDE4 version.