I have mixed feelings with this security mode. It works effectively but requires you to follow a naming structure for folders, based on username...not a problem...unless you have a crap load of domains to rename and move to the "localuser" folder. Then having to point each website to the new directories, checking code to make sure there are not any hard-coded paths. It's will take time to move to this security mode BUT it will save on IP address usage by condensing shared hosting accounts on same IP addy. Some many things to do, so little time.
FTP Isolation Mode Tutorial (IIS6)