Aha, the answer is that MS are buttpipes:

http://msdn.microsoft.com/netframewo...n/default.aspx

Visual Studio .NET and Versioning
Many developers will wonder how Visual Studio is affected by side-by-side execution.

Visual Studio .NET 2003 is capable of producing code that executes on the .NET Framework version 1.1 while Visual Studio .NET 2002 is capable of producing code that executes on the .NET Framework version 1.0. Consistent with the behavior followed by previous releases of Microsoft developer tools, each version of Visual Studio targets only the version of the .NET Framework with which it shipped.

Neither tool provides the ability to target other versions. When a project created with Visual Studio .NET 2002 is opened in Visual Studio .NET 2003, the tool will offer to upgrade the project automatically to the .NET Framework version 1.1. If accepted, this procedure is irreversible, as the project may then be changed by the developer in a way that depends on functionality made available only in version 1.1. If the upgrade is refused, Visual Studio .NET 2003 will not open the project.

Applications built with the .NET Framework using Visual Studio .NET 2002 and Visual Studio .NET 2003 will benefit from side-by-side execution. Both versions of Visual Studio .NET can be installed and execute on the same machine simultaneously for those developers who choose to support solutions on both versions of the .NET Framework.