Difficult question, but surely nice to know. Good work Andy!
Regarding the speculations about the correct answer being False, read the following BOL page:
http://msdn.microsoft.com/en-us/library/ms141682.aspx
At the section Understanding How Package Configurations Are Applied at Run Time, the steps are described in which order the configurations are applied.
It says literally:
However, these command-line options do have some restrictions:
* You cannot use the /Set or the /Connection option to override single values that are also set by a configuration.
* You cannot use the /ConfigFile option to load configurations that replace the configurations that you specified at design time.
Furthermore, the section links to a MSDN page with behaviour changes from 2005 to 2008. There is explicitly stated (as mentioned by Andy in the explanation):
In SQL Server 2005 Integration Services, events occur in the following order:
1.The utility first applies the design-time configurations. (Design-time configurations are the configurations that you created and associated with the package when you designed the package in BI Development Studio.)
2.The utility then applies the run-time options that you specified on the command line when you started the utility.
In SQL Server 2008 Integration Services, events occur in the following order:
1.The utility first applies the design-time configurations.
2.The utility then applies the run-time options that you specified on the command line when you started the utility.
3.Finally, the utility reloads and reapplies the design-time configurations.
Because the events occur in this order, you can dynamically redirect a configuration by using the /SET command-line option to change the configuration string.
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MCSE Business Intelligence - Microsoft Data Platform MVP