It's not a good thing when a simple point release of Apple's desktop OS causes a flurry of error reports with a central theme of "I just installed the 10.7.3 version of Lion and now nothing works." Last night and this morning, threads began popping up on Apple's support forum and elsewhere indicating that a flaw in the 10.7.3 delta updater is resulting in app crashes with a characteristic "CUI CUI CUI" overlay on some interface elements.
While it should be noted that there are plenty of reports of users updating with no issues whatsoever, there's no denying that for those affected this is a painful and unfortunate bug. It's especially awkward for users who don't have a bootable backup or another machine to help the recovery process, because it leaves your Mac pretty much unusable.
The good news (mostly) is that it should not be necessary to resort to Time Machine or other data restores to get back into working condition. Tipsters on the Apple boards and a helpful walkthrough at OS X Daily recommend using the OS X 10.7.3 Combo Updater to resolve the problem. (If that link comes up 404, it's a Safari quirk; just reload.)
If you can boot your Mac into Safe Mode -- just hold down Shift during startup until the desktop or login window appears -- then you should be able to download and install the Combo Updater and proceed normally. If you can't get running in Safe Mode, you have a few options; with a second Mac running Lion or a visit to the Genius Bar, you can mount your machine in Target Disk Mode and install the combo update directly.
You also can take advantage of Lion's Recovery Partition, which should be present on any machine where 10.7 was installed by the conventional process. Holding down the R key at startup will boot you into Recovery, where you can then reinstall Lion. The 10.7.3 combo update should be downloaded and installed normally as part of the recovery cycle. Do not erase your drive or restore from Time Machine, it is not necessary. The only thing that you should need is a fresh install of the OS X system, which will not impact your data or applications.
While Lion is a lot more 'recoverable' than past versions of OS X thanks to the Recovery Partition and the ease of retrieving purchased apps from the Mac App Store, a self-inflicted foulup like this one reminds us all that Apple makes mistakes (sometimes really bad ones -- remember the iTunes version on Windows that ate music files?) and that the only sane pre-upgrade policy is to have solid, tested backups.
The other point that bears repeating is sometimes harder for us to internalize, but it's equally valid. If your livelihood depends on your Mac (or your iPhone, or iPad, or PC) working as expected, installing any updates in the first day of availability is just plain dumb. Production machines need to be boring, predictable and unsurprising -- so leave them alone for days, weeks or months if necessary to make sure that any patches and 'improvements' you want to make don't leave you twisting in the wind on a deadline, or tearing your hair out over data loss.
Thanks to Matthew and everyone who sent this in.