> Or the other way around: Downloaded it first from an 3rd party source
 >  and then trying to buy it from the Android Market... this is a more
 > likely scenario. I'm not sure if the user needs to uninstall first.

No, Market seems to only care about package names. The app may appear as 
  not installed in the Market at first, but upon clicking "Install", 
you'll get the usual update prompt.

Michael

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