This started out as a response to comments on the post re: The Case of the Notepad that Wouldn't Run on Mark Russinovich's blog then I got tired of typing in that little window. I'm going blog this, then cut/paste it over there.
The real benefit of UAC is that the user account is running as a user instead of an administrator, unless they opt-in to an escalated context.
It is true that you cannot stop someone from destroying their PC if they really want to. Installing a piece of software is always a risk, even from established vendors (never had an Office install go horribly awry?). But UAC adds real value because it adds a tangible layer of protection when not installing software.
When the majority of applications that a user runs don't prompt them to authorize the application, they should realize there is a difference between normal applications and the one that's asking for permission and think twice about why the application is causing the computer to look funny.
I have issues with UAC, but I've learned to live with it for the most part. It is annoying, but there are enormous benefits to not having admin rights all the time. Trust me, it beats the snot out of running as a user in XP.