This appears to have been fixed in Ubuntu 8.04. I upgraded using the
dist-upgrader in Update Manager, and it did not download the files I
already had on the Alternate CD. I was a little disappointed that the
Alternate CD image I downloaded from the 8.04.1 "daily" directory did
not include hardy-updates though, I ended up having do download quite a
bit from there.

** Changed in: update-manager (Ubuntu)
       Status: New => Fix Released

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always downloads even if packages are on cdrom
https://bugs.launchpad.net/bugs/153843
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