When I talked to ISV, they often just want to use the .NET Framework as an implementation detail of their applications.. they don't want their users to have to go to windows update or MSDN to download the framework, and they don't want to have some Microsoft setup UI popping up during the install experience of their application.
For this scenario, we have a little known feature of setup where you can install it the .NET Framework silently.. that is with no-UI popping up at all. This allows you to have full control of the experience...
For .NET FX 3.0: the magic command line is: Dotnetfx3.exe /q
See this white paper for more details.
Oh, and if you are still on .NET Fx 2.0, the command is: Dotnetfx.exe /q:a /c:”install /q”
And you can find more out here.