Thanks for the post Ruud. Last night I had tried that very reghack and it did not appear to work on XP. However after a little further testing, it does work, but in a limited capacity. Anyone care to reproduce my work here:
 
Create a temporary directory
In this temp directory
  Create file1.txt
  Create file2.txt_old
 
dir *.txt (should display both files)

Now do the reghack: set(HKLM\SYSTEM\CurrentControlSet\Control\FileSystem\Win95TruncatedExtensions) to 0
Reboot
 
dir *.txt (both files will be displayed)
create file3.txt_old
dir *.txt (file1 and file2 will be displayed)
 
If someone can reproduce the results I got, it appears that this reghack addresses only one part of the equation. When newly created files are written it creates them with the 8.3 structure and then dir, del, etc works like it has in the past. However it doesn't address all the existing files, which are still displayed incorrectly (dir), or at worst, accidentally deleted by an del command and a misplaced "*".
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(... better days ahead)