Yes, it is officially allowed and that has been confirmed both in PMs to Mods and in public forum messages.
Originally Posted by Blue100000005
While the above works, you save yourself some patching headaches and a bunch of diskspace if instead of copying you create a virtual copy of the directory using this comand line:
Originally Posted by Lonnbeimnech
mklink /D "c:\Program Files (x86)\Turbine\DDO Unlimited-Copy\" "c:\Program Files (x86)\Turbine\DDO Unlimited\"
Obviously substitute your own dirve paths.