Today, I had a simple question. Are the customizations schema (the exported .xml file) compatible across different update CRM 4.0 update rollups? Meaning, if I export a set of customizations (.xml) from a server that has UR2 (Update Rollup 2) installed, can I import that on a server having UR4? And how about the other way around?

Turns out that update rollup 2 and beyond are actually compatible with regards to customizations schema. Note that the only exception to this is UR1.

This KB article has lot more details about this: http://support.microsoft.com/kb/968176. Below is an excerpt from the KB article.

Notes about exporting and importing customizations

You can export customizations from a server that has Update Rollup 2 or Update Rollup 3 for Microsoft Dynamics CRM 4.0 installed and import those customizations to a server that has Update Rollup 4 for Microsoft Dynamics CRM 4.0 installed. You can also export customizations from a server that has Update Rollup 4 for Microsoft Dynamics CRM 4.0 installed and import those customizations to a server that has Update Rollup 2 or Update Rollup 3 for Microsoft Dynamics CRM 4.0 installed.
If you export customizations from a server that is running Microsoft Dynamics CRM 4.0 server, do not import the customizations to the Microsoft Dynamics CRM 4.0 server in the following scenarios:

• The server from which you are exporting the customizations has no updates installed or has Update Rollup 1 for Microsoft Dynamics CRM 4.0 installed. However, the server to which you are importing the customizations has Update Rollup 4 for Microsoft Dynamics CRM 4.0 installed.
• The server from which you are exporting the customizations has Update Rollup 4 for Microsoft Dynamics CRM 4.0 installed. However, the server to which you are importing the customizations has no updates installed or has Update Rollup 1 for Microsoft Dynamics CRM 4.0 installed.