The solution is to just click on install button that does everything for you.
I really don't understand why this is blocking for you that JMS restore an installation directory instead of using the one that you have renamed.
Once the JMS patches are installed, if you don't trust the installation directory that we have restored and that come from the joomla 1.5.14, you can re-use your installation directory.
Have a look into the tutorial video that show you how to proceed.
www.jms2win.com/tutorial#jms12x-3
As you say, it should not be difficult for a webmaster to rename a directory.
The only thing that I have told you is that you can not do such operation before to have installed JMS patches because standard joomla cannot run with 'installation.php" present.
So start to install the JMS patches and after that you will be autorized to remove or renamed the installation directory because the joomla kernel will have enough modification to accept working with or without the "installation" directory.
Concerning the security, if you follow the advised that we have provided several times in the forum that consist in the installation of the master website into a speciifc directory, this mean that you can later deploy the slave site (if symbolic link is allowed) into a specific directory. When this is done, you can remove the installation directory in the deployed directory and it will be unavailable (No need to do chmod or whatever and the directory does not exists).
I always recommend to install the master website in a confidential domain and also consider the master website as a library or repository for the slave site.
As soon it is confidential and protected, there is no need to do such work on each directory like you propose as all the websites is hidden.
The slave sites will only have links on the master website and you can remove the "installation" from a deployed slave site once it is installed.
If you replicate an existing website, you can also define a rule in JMS templates to ignore the "installation" directory.
Concerning the permissions on the files, we already implemented a check concerning that but we know by experience that it does not detect the permission issue on all the environment. The real method to check if it is possible to write into a file is to really write inside. The function "is_writtable' does not work in all the cases, test the owner and group of the files does not necessary help and the function to do that are not necessary available on all the platforms, other security PHP modules and parameters may also have impacts on the permission (ie. does suPHP is used, does open_basedir is enabled, safe mode, ...)
If you know an accurate algorithm that would be able to check the permission in whatever environment and platform (unix, windows, ...) we would be happy to know it.