Using Sysinternals ProcMon: to log what the installer was doing, I logged out and back in. The attached happened after I logged in.
"8:47:16.4355314 PM","launcher.exe","22260","SetDispositionInformationFile","D:\City of Heroes Beta\assets\issue24\fonts.pigg","CANNOT DELETE","Delete: True"
...
< this continues for every pigg file in the i24 folder. It's failing because I marked it read only >
...
"8:47:16.4391322 PM","launcher.exe","22260","SetDispositionInformationFile","D:\City of Heroes Beta\assets\cryptic\bin_minimap.pigg","SUCCESS","Delete: True"
...
< this continues for every cryptic file, and at the end the binaries and piggs are all gone >
It also rewrites the settings file into a default state, forgetting what I had configured previously in terms of what was hidden and which versions of the game this installer is managing.