Yes and no. Your application will become the default application to open the DWG files. But the user will still be able to right-click the file and choose "Open with...".
I am afraid that you cannot condition the file association on whether it exists already on the target computer.
As a general note, you should avoid associating your application to file types belonging to other programs.
However, Advanced Installer allows you to add a dialog that asks the user's permission to associate your application with some file types. So, the user can choose not to associate your application with the DWG extension, if he knows this extension is already used by AutoCAD.