An old post but I needed to do similar recently so I guess it is still valid! While I don't advocate bad design, in the real world sometimes we have to bend to requirement.
Writing to the application folder is possibly under Win7 and it is possible to set this up via an installer class in an MSI created by VS2010. You just need to give a relevant group (suggest either the "Users" group, or if you want to give more control over who gets what, supply a selection screen) Write-Data access.
Using DirectoryInfo on a path you can then get the security data from GetAccessControl.
When you have your Group known, get the SID for the group and AddAccessRule also supplying the required ControlType value.
Then set the access control on the DirectoryInfo object (SetAccessControl) using the security data object.
You can get the SID from the Groups principal object if you do a search with PrincipalSearcher.
Hope this helps
paul