So, about the custom installs things.
Starting today, we’re excited to invite all Xbox Insiders on PC to preview new game installation and management features!
news.xbox.com
First of all, besides entering the Insider thing, you have to enable in the Xbox app settings.
Now, over here things are... buggy. I think after enabling it games that don't support the new feature refuse to install giving one of those super useful error codes (Undungeon, Haven for example). On these games you get the old dialog only offering the drive to install.
For games that support it, you get the dialog with the option to choose the folder, and yes, the files are unpacked. There is still a lot of "garbage" files for the Windows Store, but at least it's all accessible. Fastest way to test is with a small game like Among Us.
So.... very buggy for me, but it does appear to be going in the right direction.