yes that is correct. you cna change the compatibiolity level at will, and it instantly, dynamically starts affecting the next query that it encounters.

In my experience, there's not much that breaks. way back when i upgraded, i had a single query in an app, that was using a correlated sub query, but was grouping by or ordering by a column that wa sinside the correlated subquery...you could get away with it in 2005, but in 2008, it raised an error.

it was one of those quick fixes of the code and redeploy issues, but for a week or so, i kept compatibility at a level down till we fixed it.