Isn't this a maintenance nightmare and a security issue bundled in one?
Are you going to manually update each workstation each month for updates to Java, Flash, FF, IE, Windows, etc.?
Even in domain environments we usually end up capitulating and granting local admin rights as a) some programs simply require admin rights, and b) our support tickets went through the roof when each user required escalation to install basic updates
We prefer ESET endpoint solutions and some logical (but not too restrictive) GPO's to handle most of our workload.
With some good security appliances (Meraki), we've kept infections to 0 (but yes, malware sometimes does sneak in), our users happy, and our ticket numbers in check.
(I am very interested in Untangle, after reading all of your comments, and don't know a thing about it).
Also, I am a firm believer in company policies... the human ones, not the technical ones... we usually get really good results when rules and code of conduct are clearly laid out in a policy / handbook. People sometimes violate them, but usually in minimal ways (i.e., Facebook)... and if it is known that our network filters know about this activity and we are aware of it... people tend to keep in line.