Yes, you can use an 08-12 ignition switch with an 88-07 bike. But it does take a bit of adapting. You also lose the "P" position that lights the tail light, but that's no huge loss.
Basically, you use a tiny screwdriver or other pointed tool to flatten out the tiny tabs that secure the brass blades in the plastic housings of both the new and old ignition switches. Then you extract the blades and their wires one by one from the connectors, re-extend the tabs on the blades for the new switch, and plug the wires for the 08-12 switch into the corresponding positions on the plastic connector housing from the 88-07 switch.
When you are done, you have a brown wire left over. Cut the brass blade off of that wire, strip it, and crimp on a female bullet connector that matches the male bullet connector on the bike's wiring harness. Install the new switch, plug the connectors into the bike's harness, and you're done.
Here's a quickie diagram of what you do:
