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There would be a lot of work to refactor it to a per user system which would remove the administrative rights.
Of course even if Steam did work with just a user installation, it would still require for some games Administrative priveleges. But while it's possible to do it we are talking months of effort they'd basically have to rewrite Steam from the ground up as a user isolated system.
Wouldn't really make a difference. Depending on how the game's installer works it's likely to have the same problems. meaning system redistributeables . and registry entries. Some games actually do require some notes in the registry and sadly this is not something DRM-Free can fix since for the most part all that has been done is to put a wrapper around the installer to make it think the install disks are present.
The other point is. If you don't have admin rights to the system you're installing steam on.. you probably shouldn't be installing steam on it. Since clearly you are not the owner and the opwner does not like things installed without their permission and had you their permission you would have admin access.
Oh, and with Steam you can run games without internet, the only thing you need is admini rights (that's why I suggest this) :D
And thusly every game would have a copy of the entire directX library.
As said. This is not likely to change because it's a fair assumption: i you don't have admin rights or permission from the admin to install steam ona machine.. you likely shouldn't be doing it.
Though for what it's worth I am thinking of those situations where you can basically run a game program from a flash drive (or from copying the game files and executable over from a flash drive).