What don't you provide dll version compiled with .net 2.0?
We develop with .net 2.0 and because of your control framework 1.1 is also being uploaded to memory.
Please configure your app - provide yourapp.exe.config for yourapp.exe to load only .Net 2.0 runtime assemblies.
Is there a problem to compile it with framework 2.0? did you try it?
No problem, but we should provide compatibility for .Net 1.0, 1.1 and 2.0 runtimes, not only for 2.0. Assemblies compiled with vs2005(.Net 2.0) may not be loaded on machines with installed .net 1.0 or 1.1 runtimes only.