WITNESSES REPORTED OBSERVING THE R22 IN CRUISE FLIGHT BETWEEN 300 & 500 FT AGL WHEN THEY HEARD A LOUD BANG & OBSERVED PIECES FALLING FROM THE HELICOPTER. THE HELICOPTER CRASHED INTO A RESIDENCE & INITIATED A FIRE THAT GUTTED THE INTERIOR OF THE RESIDENCE & DESTROYED THE HELICOPTER WRECKAGE. PIECES OF THE LEFT SKID, WINDSCREEN BUBBLE & THE LEFT DOOR WERE LOCATED 1400 FT FROM THE MAIN WRECKAGE. EXAMINATION OF THE WRECKAGE FOUND NO EVIDENCE OF PREIMPACT MALFUNCTION OR MECHANICAL FAILURE. THE COMMERCIAL PILOT, WHO HAD ACCUMULATED 500 HRS IN THE R22 AND WAS CRUISING TO WORK TO PERFORM HIS AERIAL TRAFFIC WATCH REPORTING DUTIES, WAS FATALLY INJURED. REMNANTS OF MODEL ROCKETS WERE LOCATED IN A VACANT LOT NEAR THE ACCIDENT SITE. THE MODEL ROCKETS WERE CHEMICALLY EXAMINED TO DETERMINE IF A SMUDGE ON THE HELICOPTER WINDSCREEN MATCHED THE RED SURFACE OF THE ROCKETS. THE SMUDGE DID NOT MATCH THE MATERIAL OF THE ROCKETS.