Hmmm,, seems that you have covered most of the bases,,
I understand what you are saying,, and i have a better idea of "how" the users are pulling their apps ,,
we have the same issue with some of our "older" installs and unfortunately, we had to copy the setup folder to the APPS folder of the server, then once accessing the app for the first time, the path for setup files points back to this folder which the users have access to,, looking at it from a security standpoint, I would think that one might worry about the copying of the folder,, well that would certainly be able to be covered via permissions, etc,,,
I still think that this is a profile issue,, when the user is a logs on for the first time,, they are still considered as "1st run" ,, the issue also exists in XP,,
have you tried moving the Office folder to the All users folder on the PC,, ??
or ,, sharing out the folder on the Local machine?? IF all is installed local,, do you regulate the access to apps by Icons delivered by the script?
this sounds like a bit of fiddling,,
** on the cool dude,, I think I can "source" it out