UT3 sucked.. hard.. when it came to installing mods, and it was horrible setting them up for release.
Well, the idea was solid. As much as it could be under MS rules, anyway.
The whole My Documents system makes sense from a security point of view, and it's something Microsoft copied from Unix-like systems, or rather tried and mostly failed: you're supposed to have an administrator account that can change system settings and files, and a user account that can do neither, only change local files. That way viruses cannot do anything to the core system without having access to the administrator password.
The problem was that Windows, unlike Unix, was never made with that in mind. On Unix everything is read-only for users except files under /home. On Windows the assumption is the opposite, everything is read-write except C:\Windows. Starting from Vista MS decided to make more folders read-only to users, including Program Files. Hence now users cannot install mods into the game's folder any more – as they should have from the start (on Linux all UT2004 mods have always gone into /home/user/.ut2004, while the game files are in /usr or /opt and thus read-only).
But of course that was confusing for Windows users, coming with different expectations, and difficult to implement due to Windows not having a virtual filesystem tree. So putting everything into My Documents was the only reasonable thing. Doing it the old style would completely break the system (hence why Vista broke a lot of legacy apps that used that old scheme).
The mods that had to be put into Program Files were either doing something wrong, or had to replace some built-in files to go around some limitation or another. Granted, UT3 had quite a few issues with mod support from the get-go, so I wouldn't be surprised if they didn't extensively test the system, either.
In UT4 the same system will have to be used, it may just be abstracted and enforced more strictly. All mod installers will automatically write into My Documents and only My Documents.
Also, woo, the announcement day is today. It will be interesting to hear it.