A few months back when I was migrating a project to VS 2008, the PM was very concerned that .NET 3.5 would cause problems on our servers, interfering with existing applications or creating new bugs in the existing codebase. I did my best to educate my PM on the nature of .NET 3.5, that it still ran on the .NET 2.0 CLR, that it was a bunch of new libraries, that it include SDK tools that compiled the new C# 3.0 language, that it wouldn't affect existing applications. Ever the pragmatic fellow, he insisted on late night installs and system testing, nevertheless.
Now, I don't mind pragmatism, in fact, I applaud it; however, a different situation can arise than the one I just described. A non-technical PM or a draconian operations manager might insist that you don't "use .NET 3.5" and stick with ".NET 2.0". If you take this at face value, it means you can't use C# 3.0, LINQ, etc. Well, first you must get them into a Slammer worm recovery group. Next, you can still use some .NET 3.5 goodness without having to install it on the production server.
Here's a minimalist approach: include System.Core.dll in your .NET 2.0 project. You may already know that you can build strictly for .NET 2.0 from VS 2008, so just set the reference, set it to copy local, and roll. You'll have to convince them to let you install .NET 2.0 SP1, though. Another thing you could try is LINQBridge, a .NET 2.0 re-implementation of LINQ to Objects along with Action<T> and Func<T>.
At the end of the day, you should probably just stay within the environment's strictures. If you can make the case that .NET 3.5 will save time and money, you'll be much more successful in changing minds than if you just think it is cool.