MySQL - Master/Slave Replication with different server specs
Yes you can upgrade the Master's my.cnf file to handle the new environment.

I have an additional suggestion.

InnoDB prior to MySQL 5.1.38 cannot use multiple CPUs.

You can do one of two things that will not affect the Slave


Upgrade to Percona Server 5.1
MySQL 5.1.38 has InnoDB Plugin (dsiabled by default) which acceses mulitple CPUs


If you have MySQL 5.1.37 or prior, upgrade to the latest MySQL 5.1 and install InnoDB Plugin
If you have MySQL 5.1.38+, install InnoDB Plugin



Once you do, one of the above, you can configure the necessary options for accessing multiple CPUs


About single threaded versus multithreaded databases performance
Possible to make MySQL use more than one core?