if you recompile a dll with controls in it, will the Toolbox pick up the latest version to instantiate or does the reference need to be removed from the Toolbox and re-added?

Yes, it will pick it up...if you have a textbox class that you've placed on your toolbox, and then you have to make a change and rebuild the textbox class project, you don't need to remove/re-add from the toolbox. (Obviously, if you change the location of the textbox dll, you'll need to remove/re-add)

Kevin