The EU believes that simply making it obvious to users that a) there are choices and b) that installing and using another browser is easy to do, and in no way abnormal or dangerous.
If MS thought that the ballot screen wouldn't affect it's IE user base, than it wouldn't have fought so hard to ban it. In fact, they offered to sell the OS with NO BROWSER as an alternative to providing a ballot screen!
In addition, MS has refused to provide a ballot screen to non-EU users. North America, for example, will NOT get the ballot. Why fight the ballot so hard if it's going to have no impact? I think MS believes it will have an impact, and therefore is attempting to limit it to as few users as possible.
It's incredible how few people know that alternative browsers exist. I've heard people refer to IE as "the internet" or alternatively refer to any browser as IE/Explorer/Internet Explorer. IE, to many non-technical users, is synonymous with the browser. It's like saying "kleenex" whem you mean "tissue".
And there are a LOT of users that use IE, with knowledge of alternatives, out of sheer resistance to change. If they saw a ballot screen when they got a new computer rather than just IE, they might be willing to try something else.
Behavioral Law & Economics has shown that pretty much any default position is going to significantly impact user decisions. For example, in the US we have an "opt in" system with regard to organ donation and around 10-15% participation. In Europe, there's an "opt out" system with 80-90% participation. There may be cultural differences, but it's likely that most of the difference is merely due to the impact of opt-in/opt-out.
That's why academics like Cass Sunstein at Harvard have suggested that a default position of doing nothing is actually a non-neutral starting point. He argues, for example, that employees should automatically be signed up for a 401(k), and have the choice to opt-out, because when individuals are asked in studies whether they want to participate in such a program, the vast majority say yes, yet participation is FAR higher when opt-out is the default.