In the COPY TABLE TO DIFFERENT HOST/DB… option, SQLyog just copies and executes the standard CREATE TABLE… SQL returned by MySQL. The CREATE TABLE stmt returned by MySQL ver 4.1.x returns information about CHARSET which is not compatible with MySQL 3.23.x. Therefore, in some cases you cannot copy table from a higher version of MySQL to an older version. We plan to resolve this issue in one of the future versions of SQLyog.
Note: You will not face any problem related to above in DB Synchronization tool as SQLyog never executes CREATE TABLE stmt nor it requires CHARSET infromations. SJA is running successfully in many installations where one of the server is 4.1.x and the other 3.23.x.