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Running two versions of Sitefinity side by side would be impossible because the assemblies are different. The assemblies set the database structure and stored procedures. With every release, there are changes to the database. If you accessed the 3.5 version, then the database would look a certain way. If you accessed a 3.2 site on the same server, then it would downgrade the database from the 3.5 version.
We do make every effort to ensure backwards compatibility, so it is unnecessary to develop on 3.5 while a 3.2 site is still running. Furthermore, 3.5 was a more of a bug fix release, with over 30 known issues repaired, so the versions are not incredibly different. To upgrade to the latest release, please follow these instructions
I hope that I have clearly answered your question. Feel free to contact us if you need further assistance.
the Telerik team
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