Here's the short answer....
1. Linux hosting packages generally offer you more features or are more amenable to modification. But it looks like you are hosting on Windows.
2. You really want a 301 (which tells search engines that the page has permanently moved) instead of a 302 (which says it has temporarily moved and it should keep checking the original page). The effect should be the same for human visitors UNLESS IE8 has some crap code for 302s (they have been used by hackers in the past). Some search engines treat 302s as 301s to avoid hackers.
Very short answer:
1. Get them to try the 302 and see how it goes.
2. If that doesn't work try the CNAME thing.