No it wont. Not on the 32bit version anyway.
Physical Address Extension (PAE) can be used to address more than 4GB from 32-bit OSs – this is true of some Linux distributions, Mac OSX and many 32-bit Windows OSs, e.g. Server 200x Enterprise.
Here’s the catch: applications have to be written specifically to take advantage of PAE, and the only applications that do that are very specialized tools or server applications like SQL Server.
So you are probably right that a 32-bit Windows desktop OS will not support more than the current 3.5GB RAM maximum.
Footnote - Windows XP Service Pack 2 and later, by default, on processors with the no-execute (NX) or execute-disable (XD) feature, runs in PAE mode in order to allow NX. The NX (or XD) bit resides in bit 63 of the page table entry and, without PAE, page table entries only have 32 bits; therefore PAE mode is required if the NX feature is to be exploited. However, desktop versions of Windows (Windows XP, Windows Vista) limit physical address space to 4 GB for driver compatibility reasons.
SD