Since this is technically being deployed via my GPO and WSUS, same as any other Windows Update, why would this not work?
Error 1303. The installer has insufficient privileges to access this directory: c:\Documents and Settings\All Users
Because an update deployed via GPO is typically executed in the context of a local user, which presumably has LocalAdmin rights, and thus full privileges to the ~\All Users folder tree.
Updates deployed from WSUS and installed via the Windows Update Agent are installed in the context of the SYSTEM account and do not have access to network resources or USER resources.
Sounds like you will need to code this package as "Requires User Input", and have the logged on user launch the installation from the Control Panel WUApp, which will allow the installer to have the required access rights on the ~\All Users folder tree.