You can change the folder but AFAIK browser plugins can read ANY files and folders on your HDD which are accessible by current user's permissions (do you keep only encrypted docs on your disk?).
That's why you definitely should not install any unsigned and untrusted ActiveX and programs.
Correct me if I'm wrong but once I was using plugin in IE for uploading of photos ant it uploaded all photos I've threw to it and they were not in "application data" folder for sure
