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Would changing the ACLs to not allow non-admin users the ability to create directories off of C:\ really have a real-world impact of limiting LPEs?

Absolutely. When you write a tool to look for things (e.g. Crassus), you see things. Heck, I've seen a privileged service attempt to open files in C:\Program%20Files\, which any non-admin Windows user can create by default.

But no, even despite being presented with evidence for how this could fix an entire CLASS of LPEs on Windows, MSRC was not interested.