Replicate MySQL 5.0 Master to 5.5 Slave?
I have done that dozens of times for my employer's clients. In fact, I just did this a week ago. The client was using MySQL 5.0.81 and had degraded performance in InnoDB.


I create a new DB Cluster


running MySQL 5.5.27
Two DB Servers (ServerA and ServerB)
Configure InnoDB for Multicore Engagement

Master/Slave (ServerA Master and ServerB Slave)
I enable binary logging and log_slave_updates on Production's Slave
mysqldump all databases (except mysql schema) from Production's Slave to /root/MySQLData.sql
run pt-show-grants on  Production's Master to /root/MySQLGrants.sql
load ServerA with /root/MySQLGrants.sql
load ServerA with /root/MySQLData.sql
I replicate from Production's Slave (MySQL 5.0.81) to ServerA (MySQL 5.5.27)


All that was left to do was


Have the client shutdown the app
Remove DBVIP from Master running MySQL 5.0.81
Bring up DBVIP on Master running MySQL 5.5.27
Have the client start up the app


CONCLUSION

MySQL 5.5 can handle replication from previous major releases, and not the other way around.

I have discussed this before


Feb 04, 2011 : MySQL master binlog corruption
Jun 09, 2011 :  Yum update mysql from 5.1 to 5.5
Feb 08, 2012 : will replication from 5.5.20 to 5.0.XX server work?


GOOD NEWS !!!

I already answered a post back on Feb 06, 2012 ( How to setup replication(Master/slave) in MySQL 5.5.20? ) with all the steps you need.

BTW with regards to the step about dumping the MYSQL grants as SQL commands, here is my personal emulation of pt-show-grants:

mysql -hhostaddr -umyuserid -pmypassword --skip-column-names -A -e"SELECT CONCAT('SHOW GRANTS FOR ''',user,'''@''',host,''';') FROM mysql.user WHERE user&lt;&gt;''" | mysql -hhostaddr -umyuserid -pmypassword --skip-column-names -A | sed 's/$/;/g' &gt; MySQLUserGrants.sql


Give it a Try !!!

UPDATE 2012-11-27 11:07 EDT

I wanted to add additional posts I made for setting up Circular Replication should you decide to setup the two DB servers as Master/Master


Sep 24, 2012 : Setting up MySQL circular replication in existing replication topology?
May 07, 2012 : Setting Circular Replication in mysql