Is an older MagSafe power adapter compatible with a newer model MacBook Pro?
Yes - an 85 W magsafe adapter is an 85 W magsafe adapter no matter what the end cord arrangement. The newer adapters have a thin barrel more like the 45 W macbook air barrel style adapters first required due to the limited space where it connected.

The heat and burning smell could be a safety issue (especially if your sniffer isn't very sentitive)  - have it looked at by a professional that sees a lot of adapters or just replace it if your sense it it's not working properly.