I checked everything that came to my mind (use of instructions for micro timing, etc). Is there a "compatibility" mode to get lpc to behave like standard x51 in terms of instruction execution (and timer T1 opperation)? Flash magic has a checkbox "6 clok cycle" but I could not find in DS and UM what that is..

* check all timer/UART etc timings against what CodeArchitect (free from http://www.esacademy.com) generates and you will have that part in place.
* If there are any programmed delay loops, they will, of course have to be changed.
* take advantage of the port configuration ability.
* have you converted all I/O that require it to 3V3?

in other words, this is a the same as any other compatible chip replacement procedure.

There is no "compatibility mode" and no "6 clock cycle"

Erik