I just had a problem on the third use where I had:
Backed up a SQL2005 db (A)
Copied A to Dev machine running SQL Data Compare
Backed up SQL2005 db (B)
Copied B to Dev machine running SQL Data Compare
Restored A and B to a SQLExpress2008R2 into 2 db's that were setup with SQL2005 (90) compatibility
Used SQL Data Compare and merged A into B selectively (not through scripts)
Backed up new B SQL2005 db (which we will call C)
Restored C to original machine where A came from but
I get "SQL Server cannot process this media family. RESTORE HEADERONLY is terminating abnormally" which I would expect if I was not carefully that all db's were SQL 2005 version.
Why would I get this error? The only thing I can think of is that Data Compare did something to the db to make my 2005 server think it was 2008.
The work around I found was to:
Restore B over A
Run scripts generated by SQL Data Compare on B to make it C.