Currently the extension install in JPI will only works when you login window Vista as Administrator, for Administrator User or Standard User, it won't work.
The issue is not only related to write file to jre/lib/ext directory, it is before that, JPI don't have permission to create a bin/java process which needed to do extension installation. as extension install is a separate process as a new installation.
The window Vista has taken the new security model and won't allow low process (JPI in IE) to create a new process. See bug #6440902 for same issue.