Lots of web sites which host file downloads and/or media files will break, due to the MIME Sniffing changes in IE. Today, many sites get away with having misconfigured MIME types. Half the webmasters (out of the ones who haven't been laid off yet) don't even know what a MIME type is, so forget about the problem getting fixed quick. The new behavior can be overriden on the client side via registry, but the new ADM files will not have a GPO for it, and it won't be exposed in the UI, so a lot of users will be puzzled and a lot of webmasters will be caught off guard. Everytime something like this happens, people "solve" their ignorance by saying, "Oh, don't use SP2. It screws stuff up."
That's why some of the other site-breaking features of IE, including the blocking of certain ActiveX controls which were not otherwise blocked before (this is a slightly different situation than the "do you want to install?" prompt), are explained to the user via the new Notification Bar. It's a pretty slick UI feature, but the simplified information given to end-users is not going to be enough for users to tell the web sites what's wrong. By the way, Microsoft's own Office Update control is blocked by default. You don't even get a prompt to tell you that it's signed by Microsoft and giving you a chance to let it be installed. Presumably, Microsoft will adjust the way their Office Update page is coded to avoid screwing themselves at release time.
And then there's "Local Machine Lockdown." Some people know that IE has always had a hidden security zone reserved for the local machine. There's even a reg hack which lets you make it visible and modify it. Starting with SP2, those modified settings won't do squat because the new Local Machine Lockdown policy will override it. Luckily, a new reg key lets you turn it off. Otherwise, apps which use web pages installed on the local hard drive that have complex scripting (often used for computer-based training and online help, but also occurring on developers' machines) can break. The great thing is that they break quietly. It's not like those Outlook security prompts which tell you that a script is trying to access the address book and do you want to allow it for 5 minutes. Nope, your stuff will just not work. It will sit there and do absolutely nothing. Remember the phrase "Local Machine Lockdown" because that's what you'll be Googling for, when the lights go out.
Speaking of developers, remote debugging in Microsoft's own development tools is clobbered by default. Of course, out of everybody with "developer" on their business cards, probably 1 out of 20 deserve it. The rest are going to be thrown for a loop when they want to step through their ASP page running on another machine, and they can't anymore. After scratching their heads for a few days, they will stop pretending to be Microsoft developers and start pretending to be Java or PHP developers. They'll understand even less, but they'll get new business cards.
You think that only web apps are affected? Wrong. Everything applied to IE is also applied to explorer.exe by default. This results in interesting stuff that you thought you would only see on Windows Server 2003, like prompts asking you whether you really want to run an exe file which is located on a network file share, after you double-click it, even though you're not accessing it through the browser and it wasn't downloaded from the web.
Already, a recent security patch has broken download manager type programs like Net Transport which assume Windows supports URLs with user:password embedded in them. Even though the patch has been widely publicized as critical, the number of people who have installed it is tiny, compared to the number who will eventually install SP2. Get ready to find out how many programs do stuff that you never expected.
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