"elevated privileges, this should not be required for end-user software (and if it is required, then there is something wrong with the OS design)"
I think Win7 has a pretty decent balance in this respect - I haven't found many apps that require elevation when they shouldn't. Mass Effect was the last oddity, that springs to mind.
However, I was playing with some USB debuggers the other day, so I had UAC messages every few minutes for install/start/debug/etc., and ended up clicking the accept button without even - this made me pause because I suddenly realised that I had no idea if I'd accepted it for the app I was even using...
I think the UAC screen needs two changes:
1) Drop the stupid fade effect on the rest of the desktop. It adds an annoying black-screen pause while I wait for my (high-spec) PC to display it. Or is this on purpose? Just seems pointless and annoying to me.
2) In contrast to point 1, either have a two-step process (an "I accept" checkbox to enable the "OK" button), or a couple of seconds countdown on the button (a la Firefox's addon confirmation).
The difference is that I can be reading the info on the app requesting elevated privilegs while I wait.