This sort of continued disregard for security is unacceptable and inexcusable. It does not take significant knowledge to know that some of the things being done are flawed. If internal expertise is not available, an external consultant should be hired for a security review of any critical code such as fpexe. This is not rocket science nor is it particularily advanced programming. Nothing that I have described above is complicated or new.
Code reviews are common practice in many companies and serve good purpose.
Once Microsoft fixes their glaring holes, assuming they do, I would suggest you should consider if you want to run their FrontPage extensions at all. It is very possible that when someone gets bored they will find a hole in the FrontPage CGI scripts that gives them user level access to your system. Microsoft's own source speaks better for itself than anyone else ever could. After all, it was only after the source came out that these flaws became a problem. This was a gaping hole waiting to be discovered.