Here's a photo to test...

Good, Patti
Yes, when importing this image, the organizer showed a dialog asking which tag you wanted to import:
Cruises,Doug, Patti...
I selected all, then your tags were shown in the properties of the image, just like if you had entered them in the Organizer itself. Only difference: the tags are attached to a category 'imported keytags'. Now if you want to create a new category like 'myholiday', you could select 'cruises' and attach all images with this tag to the new ''myholiday' category.
Conclusion: Yes you can recover tags automatically.
I suppose that if you had rated your image, let's say '3 stars', this rating would have been recovered too.
I'll have to check with Exif Viewer in firefox if anything has been lost.

Edit:
The caption is also kept : 'Friday - Saint Maarten Day' as well as the file name 'Friday - Saint Maarten Day'_0001.jpg'.

thanks, Michel. Thats good to know. I'm assuming that any comments or journaling that I was able to record in the Memory Manager will not transfer over....