In short, yes, otherwise what is the point of building it in SP2?
Would it run with SP1 runtime? Most lkely it'll as long as it doesn't use any new features (reporting?) and does not relies on bug fixes in SP2. I would not recomend to do that though.

>So the bug - reported or not - is verified to having been around since whatever version is marked.
>
>Would deploying an EXE built with sp2 require any upgrade to the run-time libraries installed ?