is boost compatible with varnish?

I can't answer this question (since I'm looking into these options myself right now) but I believe that even if they are not strictly mutually exclusive, it will not be a good idea to have 2 caching mechanisms. What I'm trying to do right now, is determine the pros and cons of the 2 options since there is no way in hell for me to use them together :P

As far as i know:
Varnish puts the cache in ram and boost puts it in hard drive. Since ram is faster than hdd varnish is faster but since you (usually) have less ram then hdd boost can hold more cache. You can make conditions on varnish that are then rendered in c(or c++ dont remember right) so they are a little faster than boost.
When in boost and you have free ram (not used by mysql/apache etc) linux puts the static files that boost generates in memory so they are faster. Then it depends if you are in apache or nginx(the later serves static files much faster). But you can put varnish in a different server.
Basically :
varnish is faster,harder to setup(you need d7 or pressflow) and more $$$
boost is slower,easier to setup and less $$$

Not recommended to use together because they do the same job.
Set active if more questions.
Check this http://groups.drupal.org/node/26485

Just as additional information (to have this documented in this issue):

While it is correct that Varnish is harder to setup, it has one advantage: It takes the load off Apache. And with really high traffic that is where the real bottleneck then is.

While a site can break down under the load of Apache (97% cpu usage, 5.0 load, 8s response times), it will be hardly loaded with Varnish in front of it (0.1%-1% CPU usage).

So Varnish and Boost together make an ideal pair, because they are not doing the same job, but can be combined in a clever way.

For a little more information see here:

http://drupal.org/node/701826#comment-4501954

Best Wishes,

Fabian