I posted a workaround for re-installing or doing a clean install using Vista Upgrade Edition DVD's last week. That information was based in part on several blogs around the net that posted what I felt were incomplete instructions, which were rounded out based on my own testing and snooping into the matter.
Today news comes via vnunet.com that Microsoft is aware of the loophole, but does not - for now - intend to remove the ability. I can't tell you how relieved I am as an IT consultant. One of the services I provide includes emergency system restoration when a hard drive fails, or clean-up after a massive exploit/virus disaster.
For those looking to get Vista at a discount that don't want to upgrade from Windows XP or 2000 (and thus invalidate their registration keys for the older OS), the Upgrade Editions are NOT the best way to go. Shop one of the online retailers -- like NewEgg.com -- and buy the Vista OEM flavor of your choice (assuming you never intend to move the OS to a newer computer in the future) at a far steeper and legal discount than the Upgrade Edition.
Quoted from the article from vnunet.com regarding clean installs using the Upgrade Editions:
"As such, we believe only a very small percentage of people will take the time to implement this workaround, and we encourage all customers to follow our official guidelines for upgrading to Windows Vista.'
Microsoft added that it does not have any plans to disable the workaround at this time."