I installed iOS 4.2 Beta 3 on my iPad on October 13th (just after Beta 3 was released), and it runs like a charm! 4.2b3 runs so much better than 3.2.2 and 4.1. I have not come across any apps that won't run in iOS 4.0, and most of my apps do not have a iOS 4.0 Tested Seal in the app description.
As for memory hogging programs, I have the System App, and if I am running low on memory, I just click to free up around 80MB of memory. Usually I can sustain around 100MB of free memory with all the daemons running, and around 3-5 apps in the background. The user is allocated ~190MB in iOS 4.2 Beta 3, and I have not run across any apps that use any where near that much memory, and I have 250 apps installed (NOT jail broken apps). If an app needs more than 100MB of memory, I'm sure the system will deny the allocation, and allocate swap space instead (which is stored on the 16GB/32GB/64GB Flash disk).
Everyone is really in store for a treat with 4.2, as there are tons of improvements!