Hi,
You don't have to compile the rpms from source if you do not want to, the '9.2' mdk ones are set up so that they will be 100% compatible with your system. A lot of times the older ones or 3rd party ones will work also, they are just not processed by mandrake people. Of course, there are exceptions, which is why they have the special rpms in the first place.
So yes, you can (usually) take any type of source rpm and compile it for mandrake. What will ruin your day you are the dependencies that you must resolve by hand to get everything to work (ie the compile of package x depends upon the previous existence of library y, which you ma or may not have).
As for the updates to 9.2, I have been using the 'update 5' set up by bluehawk on the redbox.cz site for a few days. It is 9.2 with some recent cooker additions. I had previously used the rc2, and I can say that there are not a lot of changes. The menus don't disappear when I use rpm, and if you have an (non compliant) LG drive, it will not scramble its firmware. But I do not notice the difference very much, I did not havce any issues with 9.2 rc2.
There is an rpm to upgrade the kernel, get the source too if you want to recompile. To do it you basically set up the .config file for the system you want (you can remove a lot of stuff that you know you dont have/need), then you compile it and then install. I will leave that for later, as there are several more authoritative posts on that here.
You can keep several kernels around, since the boot loader will give you the options as to which to use. The rpm install does this for you by default. It is very simple though, as you just need to edit a text file and set up a symbolic link. It depends if you are using lilo or grub. Grub is set up via /boot/grub/menu.lst and lilo is set up in /etc/lilo.conf. The symbolic links are in /boot, and this is where you would copy your compiled kernel if you do it by hand. the symbolic links are just there to specify the default kernel so the config file does not need to be changed. As I said, the rpm install does all of this., you could have a look, then install to see what is different. Then it might be easier for you to add your i686 recompile.
PS Here is a very nice compile instruction link, the one at
http://tldp.org is offline at the moment.
http://www.vectorlinux.com/forum/viewtopic.php?t=122