Contained Installs:
Is there any way that Rocket Beta could simply use the C:\Users\UserName\UDKInstallDir\Projects\… and create sub folders of multiple projects in there? Retain the centralized efficiency for which UE3 users are familiar. Why scatter projects and installation across multiple parts of a person’s file system (like in “documents”) and add to the confusion?
Any resources shared amongst all games could be put in a project directory called “Shared” or something. Which could probably work, unless somebody calls their game “Shared” :).
Also, I have a lot of other files in “my documents” already – these folders created by rocket are very much likely to get lost in there. So keep it in the Rocket install folder, and use new subdirectories to differentiate between new projects in that way.
Silent Updates:
At the user’s option, could there be an automatic upgrade process like FireFox? Like if there’s a new download available, can Unreal just download it in the background, and then prompt the user to run an uninstall on the previous version and then install the new version? This way, if the user chooses, the developer can keep working while the upgrade process happens automatically. If there is a licensee issue, then perhaps a central DB can check to see if the licensee has paid for an upgrade or something.
About Contained Installs:
The “My Documents” folder is only a default location to place your projects. If you create your project in another location, the next time you open the “New Project” dialog, the parent folder of the project you last created will be selected by default. The reason we do not use the Rocket install folder (by default) is that it is within the “Program Files” directory (also by default) and some users may not have permission to write to that folder, depending on computer and administrative settings. If you are certain that you have permission to write to that folder and would prefer to keep your projects there, you are free to do so.
For example, if you select “Create Project” and navigate to C:\MyProjectsFolder\FlyingGame to create your new game about flying, the next time you try to create a new project Rocket will assume you wanted to make your next game in C:\MyProjectsFolder.
Shared resources will be managed by plugins, though plugins with content are still in development. The location and management of these shared resources is under discussion so it is too early to say exactly how they will work at this time.
Just adding to Bob’s response.
About the Silent Updates. Thanks for the awesome feature suggestion. We do have something like this in the works already. Hopefully in a future beta release you’ll be able to see it in action! 
–Mike