Well, I still think it's worth saving the tree, not only because it's a good landscaping element you won't get back easily, but also the value a good tree can add to you house.

Pipe bursting would most likely not damage the roots excessively, but it will break any which have grown in to or around the pipe. The process is familiar to me and many people use it to save money or lawns/drives built over the pipes, aparently it works very well. It probably will damage your driveway if you have to dig the hole in it, but you should assess your driveway's value and how replaceable or repairable it is. Some driveways like mine are made from bricks and you can simply put the bricks back after lifting them, concrete ones will look crummy with big patches in them, but you can allways look at one of the re-finishing options that will add a whole new image to your garden. I've seen them made to look like brick or stone with thin bits of stone/brick cemented to them. Or you could build raised planting beds over the patches to hide them and improve the garden.