Hi @frankenspank
There are several things to be aware of here:
1. In the Silverlight 3 Tools for Visual Studio 2008, there is no visual preview of the design (there was a read-only preview in Silverlight 2 Tools for Visual Studio 2008, which would allow you to see the design but not select/drag controls around, but this was removed in the Silverlight 3 Tools release)
2. Until Visual Studio 2010, there is no interactive design surface for Silverlight in Visual Studio.In Visual Studio 2010 Beta 1 you can try out an interactive design surface that will work with Silverlight 2 and pre-release versions of Silverlight 3. For a version that will work with RTM Silverlight 3, you will need to wait for the next public pre-release of Visual Studio 2010.
In your case I would expect that when you attempt to edit Silverlight 3 files, you would not see a visual preview of the design at all.
Mark
Mark Wilson-Thomas - Program Team - WPF & SL Designer for Visual Studio - posts are provided 'as-is'