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Please don't shoot me for this, but I have been tweaking around with jQuery 1.4.2 for the sake of experiment, and I actually need it as well. I adjusted the jquery_update module so that I have jQuery 1.4.2 everywhere except for users with 'administer views' permission. All things that need jQuery 1.4.2 work nice, and so do the other libraries (fancybox, jquery.jqtransform, etc). The only issue so far is that my ajax submit form doesn't work anymore. I used it for the simplenews subscription form. When submitting anything, a browser popup appears saying: 'an error occured'. Using jquery.form.js v1.2 provided by Drupal core has the same result as using jquery.form.js v2.43 provided by the jquery_update module.
The only issue I found about it is this, but it is not very helpful yet: http://forum.jquery.com/topic/jquery-1-4-1-problem-with-the-form-plugin . I might explain my issue there as well later.
Because I know I shouldn't touch jQuery 1.4.2 at all, I've set the priority to 'minor'. I just post this to share it and for future reference.
Tnx for your time and interest.