I have been running as a normal user in XP Pro for the last couple years, using a program called SudoWn. It works perfectly fine. I had trouble with versions of it after 2.0, which requires .Net 2.0, so I just stuck with that version. The only thing I have to log in as admin for is Windows Update and if I want to play Deus Ex 2. I did have to manually set permissions on some folders to make things not broken (Program Files), but it works. My normal user can't write to C:\Windows or HKLM, or the root of the C: drive. I don't see a real security threat from having write access to C:\Program Files if those other directories are protected.
Oh, also I have to run stuff like DirectX installers or other MS shared runtime installers as an admin using "run as" instead of SudoWn. Generally anything having to do with drivers I also install this way just to be safe.
The real news to me is that 8% of the malware out there can apparently still install with my setup. Good thing I keep my antivirus and windows patches up to date...