I have some old projects that use LLBLGenv1 but it seems I keep running to reference issues when both v1 and v2 are installed side by side. Is there special precautions I have to consider to run v1 and v2 side by side or the safest thing is to have only one of them installed at a time?

You can run the designer side-by-side simply by installing to separate directories.

The reference issues are only occuring once in new projects in vs.net, where the vs.net ide picks the dll of the wrong version. Manually correcting this in the generated code projects solves this (and this has to be done once).