I just remembered that I got an interesting question during my recent Visual Studio Team System workshop regarding usage of MSBuild to target .NET 1.1.
Yes, it's possible, if you use Mr. Bee. No, wait... MSBee. It is an addition to MSBuild that will allow you to use Visual Studio 2005 to build 1.1 applications. However, I'm not sure about current project status since version 1.1 seems to be a long time in the making and version 1.0 is over one year old.
But if you were wondering if you should just sit and wait for Orcas to do the multi-targeting trick for you... well, you could. Unfortunately, it seems it only works for versions 2.0, 3.0 and 3.5 of .NET Framework.