I am really happy to see this as an option in the Windows installer. This has a potential to really reduce the support burden on training new Windows users to use Python and will really help normalize the experience for new users between Windows and POSIX platforms.

Unfortunately, from what I can tell, this is OFF by default. I think that is a mistake. The default for something like this is really important because without new users being explicitly told to set it, new users will not. Most new Python users are just going to take the default values and still be confused by not being able to open the console and run python as in the instructions for various new user tutorials (i.e. web frameworks, scientific computing, etc).

I understand the issue with installing multiple Python versions, but generally speaking people are going to want to install the latest version and have that be on their path. My sense is that there is a relative minority of Windows users that care about multiple versions of Python would not want their path to be updated. Unfortunately the ones who don't want their path updated are the ones that have driven the installer development at this point and will be most vocal in the Python community. 

I suggest a compromise which makes adding to the PATH default to ON if another Python version is not installed and/or on the PATH and default to OFF otherwise.

It looks like you can use a condition table plus the feature table to check for Python in the path buy I am not exactly an expert with MSI. My quick check found:
http://msdn.microsoft.com/en-us/library/aa368012(VS.85).aspx which says you can do a search for an installed component and then set a property. This should then allow setting of the default state of the feature based on a condition.

I really recommend that while we still have a chance to make a change that we think about the goal of this feature and whether making it disabled by default achieves those goals.