Are there any implications with taking a netBSD 4 kernel and the
  associated lkms and using it in a system that has otherwise been
  compiled with netBSD 3. Essentially taking an existing netBSD 3 unit
  and overwriting the lkm and the kernel binaries with a netBSD 4
  version. Will the system still work? and if so will it work reliably?
  Has anyone done something like this before?

It will likely more or less work, but it's not really a good idea long
term.  The kernel from netbsd-4 will implement the system calls from
netbsd-3, and thus things will mostly work.  But some things are tightly
coupled from user to kernel, like perhaps ps, and definitely ipfilter.
So enabling and querying firewall will almost certainly break.

Taking a netbsd-3 system and updating kernel (first) and then userland,
on the other hand, leaving packages and other programs unchanged, is a
very reasonable thing to do and I do that sort of upgrade all the time.