Users generally need to access things like libraries (stored in /usr/lib) and various configuration files stored in /etc to be able to do their work. Why, specifically, do you have a problem with users being able to see these things? They won't be able to modify anything outside of their $HOME (unless you have messed up the permissions). If it's really an issue, you could restrict users to a chroot jail. It all depends on how they're logging into the system (locally at the terminal? remotely?).
If you're paranoid about security, you might start by running an up to date, security patched distro. RHEL 5.0 is as old as the hills; the latest release of the 5.x series is 5.7, IIRC. Assuming you have a valid RHN subscription (and because you're running RHEL 5.0, you should), it should be pretty trivial to upgrade to the latest RHEL 5.x release, which contains numerous bug fixes and security fixes.
Also, I don't get what sudo has to do with this. The sudo command grants root priviliges to authorized users, and root can do anything to the system. Ordinary users should definitely not be able to use sudo.