>I have an application in which I'd like to use the Microsoft Web Browser control. The setup routine for this application will have to install the control if the user's machine doesn't have it installed. OK, fine.
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>Does a full install of IE have to occur for the Web Browser control to install properly? If so, what are the licensing issues regarding the Web Browser control?

You've got to install IE; at least enough so that the in-process server component SHDOCVW.DLL is installed and registered, and the only way that I know of to do this is via at least a minimal IE install.

IE is redistributable with your application; you'll need to get the IEAK (the Internet Explorer Administration Kit, used to deploy or distribute IE as a part of an application). It's been a while since I looke at all the details; while no fee is involved, there are quarterly reporting requirements. You should be able to get the gory details at http://www.microsoft.com/windows/ieak/en/default.asp including what components are part of the IEAK.