Confirmed. 2k8 R1 SP3 does NOT fail the query on query timeout through to a SQL 2k5 server. I do not currently have two 2k8 instances to play with. I'm asking one of my DBAs to go and test if this is a source or destination version issue.
This is more a linked server than a job issue. The proc itself won't error, so the job is clueless there was a problem.
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