I used IA9 to build just an updater for an application that was already set-up with IA. The updater project doesn't install anything, I just use the functionality like check for updates, download and install them. I recognized that the built in /update Parameter is necessary to hide the init dialog and so it is really possible to build an application with InstallAware that checks for updates etc. .
Maybe in a next release you could also build in some checkbox (like "build an application not installer") that will result in creating a .exe file without having an .msi file included. If ApplyInstall isn't called once in script I think this .msi file wouldn't be neccessary.
The capabilities of IA would raise enormous with such an option, I think.
Here's another InstallAware X teaser: a setup project for testing InstallAware 10. Running this under the MSI engine will create only one folder, running it under the native engine will create a thousand folders.