First, %AppData% is a subdirectory of %UserProfile%, so it's not like
this is a totally different place.

More importantly, we are following the platform guidelines, which
say:

CSIDL_PROFILE          Version 5.0. The user's profile folder.  A typical
FOLDERID_Profile       path is C:\Users\username.
                       Applications should not create files or folders
                       at this level; they should put their data under
                       the locations referred to by CSIDL_APPDATA or
                       CSIDL_LOCAL_APPDATA.

When Emacs on Windows starts up, if %HOME% is not defined in the
environment already, Emacs defines it to refer to %AppData%.  See
w32.c:init_environment for more details.

I think we are, as much as practically possible.

True, but probably a decent fraction of users still tend to keep "emacs.d" in %UserProfile% similarly to how they keep "emacs.d" in $HOME on Unix. Yes, defining %HOME% is a possibility, but once again requires manual intervention and reading a manual after being surprised with something like "why the hell my configuration isn't loaded?" So I have the following proposal:
  1. If %HOME% is defined, use it (current);
  2. If "emacs.d" is present in %UserProfile%, use it (new);
  3. Fallback to %AppData% (current).
In other words, I propose to introduce #2 without ruining the already existing logic.