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Mac OS X 10.7 Lion is supported on late 2006 MBPs.
3 GB might not be enough RAM though, depending on your workload, but you could always use an external HDD to backup your current Mac OS X 10.6 Snow Leopard installation via CarbonCopyCloner (version 3.4.7 is still free and available for download here and works with Mac OS X 10.6 Snow Leopard, Mac OS X 10.7 Lion and OS X 10.8 Mountain Lion) or SuperDuper! and then upgrade to Mac OS X 10.7 Lion and in the event of not working out between Mac OS X 10.7 Lion and you, you could always revert back to Mac OS X 10.6 Snow Leopard via booting from the clone and cloning it back.
 
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