Remember .NEt 1.1 is now (as of 10/14/2008) no longer supported. This means that is your application "mis-behaves" on a customers machine you have no one to turn to for "real" help.

If you (or anyone else with a similar situation) has NOT tried compiling under 2.0 (or later), I really wonder WHY?

If you have tried it and NOT found any problems, then I REALLY wonder WHY one would still be deploying 1.1 application.
The fact that it is no longer supported by MS is not an issue to me. In all my years of developing software I have had the need to contact MS support on one occasion and they were not able to help with the problem anyway.

Yes I have rebuilt apps that were built to use 1.1 using 2.0. I received a few warning messages to change some code but it worked fairly well.

I also still build apps from time to time with 1.1 and have several that are deployed in 1.1 and will continue to be. The major reason is that 2.0 will not work in some of these cases and 1.1 does. Of course I am talkign smart devices here running CE.Net 4.x and many of the ones that I have rebuilt was because the device was replaced with a Ce.Net v5.0 device.