Well, I looked around and looked in my other user folders on several 10.6.8 boxes and the Applications folder is there in many users, but not for all, so this leads me to think that this is a supported folder, but an optional one.
Still looking in to it to see what the complete scoop is.
Edit:
AHA! Many times when we run an installer, the Apple approved installer allows you to install an application for just one user, or for all users on the system. That's how this gets created.
The user specific Applications folder is a standard and supported folder, but an optiopnal one, even though Apple's docs neglect mentioning it.