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answers:

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I am thinking of installing SQL Server 2008 R2 and tools on my box. But it occurred to me this might mean I cannot edit SQL server 2008 reports and use our sql server 2008 report server. Is this correct?

+1  A: 

Generally, the server-side Reporting Services installation will support reports of a lower version level. However, a report will be upgraded if you open it in a higher version level.

So if you want your '2008 reports to keep working on a '2008 Reporting Services installation then do not use '2008 R2 tools to edit them.

gbn