I'm not sure how to put in a feature request so I'm putting it here.
In single user WordPress you can install a blog virtually anywhere in any folder or subfolder or sub-subfolder. I have a website with about six different single user WordPress installations in it. One of them was in the root, another at for example mydomain.com/movies/ and another one at mydomain.com/tv/comedy/ and another one at mydomain.com/tv/drama/
However WPMU only lets you install in a subdomain or in a subfolder one level away from your installation. I like the flexibility to install blogs in any folder at any level of nesting deep using MU.
A related problem...
I have a single user WordPress blog at mydomain.com/vacation/ but there are subfolders off of the /vacation/ folder that are not part of the blog. Among them is a web calendar installation at mydomain.com/vacation/calendar/ and other various subfolders that for whatever reason I want to maintain as subfolders of /vacation/.
But as long as /vacation/ physically exists as a real folder, I could not put a blog there even if I include some sort of mydomain.com/vacation/index.php file.
It's my understanding that it is a design goal to make single user WordPress and WordPress MU to be as identical as possible. This is a major problem for people trying to convert multiple single user installations and it ties the hands even of those who start with wpmu from the beginning. It also goes a long way towards making wpmu a more useful CMS and not just a blogging tool. This