Dot Net Versions and Application Implications

I am currently developing using .Net 1.1 because most of our clients (educational sector) are only just accepting this version of the framework and none are planning to go to .Net 2.0. The only problem with this is that I need to develop an application to work on a machine for an internal application that will have an application (third party) installed that would require .Net 2.0. What are the implications regarding developing ion 1.1 and running it on a machine with 2.0 installed as well? It appears from some threads that as long as 1.1 and 2.0 are both installed that the application should work fine.

Any advice would be gratefully received.