John,
Sorry, I had a post ready with a couple of citations from MS site, to back up your contention that MSDE is not SQL Server, but I previewed the message and lost it when I hit the back button. Arggh.
Anyway, the fairly consistent line from the product's introduction has been "MSDE is a data engine that is compatible with SQL Server...". I saw a couple of references that said something like: "MSDE includes technology from SQL Server", but nowhere was there ever a statement that MSDE is a limited version of SQL Server.