I haven't seen the results of the discussion in General yet (I usually read the BBS from the bottom up), but I agree that this should be a feature in the Emplode installer.
I think the root of the problem is that their current build process uses some automated "prebuilt template" tools to create the installer, and they haven't had time/ability to go in and write their own installation script to handle the situation you describe.
The early (internal alpha) builds of 1.1 and 2.0 didn't have the warning box telling you to de-install the old version. If you tried to install atop the current version, you'd find that it only gave you the option to "repair" the current installation, which of course did not work. So the quick and easy work around was to add the warning box. Agreed, it's a PITA, but at least it works.
I, personally, think the new MSI-installer stuff is a Bad Thing. Give me the old reliable InstallShield 5 any day. It's the main thing I use in my day job, and I can accomplish just about anything in its scripting language if I'm willing to put the time into it. This new MSI-installer is buggy, kludgy, bloated, ugly, and otherwise just plain wrong. But that's just my opinion.