I replaced the A/C compressor on my '92 965 a couple years ago and retrofitted to R134A at the same time. It wasn't a particuarly fun job but it's doable. First, get the retrofit kit from Volvo. It has everything you need to to the job correctly. You may also want to look into getting a variable orifice valve while you have the system apart. I didn't do this and I kick myself now for not.

1) Take the car to an A/C shop and have them evacuate the system. My mechanic actually paid me for the 1lb of R12 he got out of my system, which helped cut down on cost.

2) Replace the compressor. The biggest pain is that there's no room to work down there. Other than that it's no big deal. Just make sure to lubricate all the o-rings with the oil you get in the Volvo kit before putting it together. You're also going to need to poor some oil into the compressor. There's usually instructions with the new compressor RE this.

3) Replace the dryer. Easy. Again lubricate all o-rings.

4) Replace the orifice valve...this is actually simultaneous with #3 b/c they're in the same line.

5) Go back to the A/C shop and have them vacuum test the system for leaks and then fill it with R134.

6) The Volvo kit came with new o-rings for every connection in the car. I didn't bother. I only replaced the ones that I took apart. I've got no leaks at 80K miles later.

The only difference I see between the R12 and R134 is that the system takes just a little bit longer to cool down when the car has been sitting in the sun for a long period of time. Other than that there's no difference (except price!) The variable orifice tube helps with this.
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Lance '92 965 w/ 180K miles