Hi Drew,
Opening the report in CR 2011 and saving it does update the report. To be sure, you can go to the Report option on the top > Performance Information > Report Definition. Look for the 'File format schema' and it should be 14.0.0.
Are the reports (with Dynamic prompts) saved to the BusinessObjects Enterprise in any case?
Do Dynamic prompts work in a new report created in CR 2011?
-Abhilash