The engine itself should compile without much fuss for 3.5. If you're seeing thousands of errors, it's probably just a few errors in BEPUutilities causing an enormous number of errors in BEPUphysics due to the missing dependency.
The steps to compile for 3.5 look something like:
1) Make sure every project is set to 3.5.
2) Remove the WINDOWS compilation symbol from the BEPUutilities project build properties. This makes the build fall back to the Xbox360's support level, which is compatible with 3.5.
Issues have been reported with ALLOWUNSAFE and the unity webplayer, so if you hit some weird errors at runtime consider getting rid of it too.
3) Change ParallelLoopWorker.Dispose's getToWork.Dispose to getToWork.Close.
I believe it should then compile successfully.