Do not lock tables during snapshot generation. All Subscribers must be servers running SQL Server version 7.0 or later.
Select this option to enable concurrent snapshot processing. This option is displayed with transactional replication. Publishing tables will not be locked while the snapshot is generated.
This only says no TABLE locks. Can you monitor the locking activity? SQL Profiler?
How about using MERGE replication with trigger synch?
Kalman Toth - Database, Data Warehouse & Business Intelligence Architect
The Best SQL Server 2005 Training in the World!