What problems have you had with a limited user? You can install extensions and search engines without needing to be admin. Installing plugins (e.g. flash, acrobat etc), needs admin rights, but most are installed via exe downloads. What makes it a 'very broken experience'?
Install Firefox as admin. Run it as a limited user, you'll get asked whether it should be the default browser. Click Yes. Notice how it doesn't become your default browser. Enjoy this fun every time you run it!
Try it on a day when one of the non-optional updates comes out and the stupid thing won't run because it keeps failing to install it.
Try setting things up as an admin so that limited users can just use it (proxy settings etc) and not break things they shouldn't meddle with.
Can you even set a default browser per user? I always thought setting a default browser was for every user. I install Firefox as admin, then run it once with the same account.
What happens when you start IE as a limited user (but something else is the default browser)?
I've never had a problem with updates as a limited user (Firefox still runs, it just doesn't install the updates until logging in as admin).
Of course you need to be an admin to update the browser with security fixes, but that is the case with all browsers.
Um, I run IE as a non-admin user on a daily basis and have never had a problem with the updating feature, because it was designed to work properly in the first place.
I guess it installs updates when you log off then? Although I have only ever noticed the Windows update icon when logged in as admin.
I wonder why I have never had the problems you have with Firefox - did you upgrade from older versions, or do a clean install (no profile folder or anything related to Firefox)?