As for the 3.5 -> 4.x migration, the idea was that kde3 and kde4 applications should use different dot-directories and the kde4 application should migrate the settings from it's 3.5 counterpart on first use. Unfortunately most distributions didn't make use of this feature, either using separate directories without telling KDE4 where to find KDE3 settings to migrate, or pointing both to the same directory forcing KDE4 to do an in-place conversion thus making a downgrade to KDE3 impossible (without removing all your settings).
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