Thanks Suzanne - that's some positive news.
I had two support calls logged with Microsoft detailing two different issues with this feature which they have literally just closed on me saying I can't log developer issues that way and to use the forums instead. And that's even after doing a remote session with their support people to show them the issue, and they ponder what I've shown them for almost a week and then just close the calls. It's so hard to get an issue escalated.
I have also found that using Documents.Add using a document that is read only will also fail if this feature is enabled - Word returns a runtime error 5097. This also occurs for some files in directories with limited access (like the default workgroup templates location) Move the files to another location and they work. It's breaking simple VBA code I've had running for over 20 years.
And it's also frustrating that this feature is only on for some users - there is no consistency at all. I've tried asking for a non-developer solution of being able to turn it off. That would be fine as a workaround for now.