I have IE8 and didn't want to uninstall it. The check fails on KB950759 according to the log. After experimenting a bit I found that HotFixCheck.exe uses %errorlevel% to determine if the check passed by passing the KB as a parameter. (As in "HotFixCheck.exe KB950759").
After running setup.exe, I went to %temp%\VSD????.tmp\ where the temporary files for the installer are stored, and quickly replaced HotFixCheck.exe in the VistaKB950759 folder with a copy of notepad.exe (renamed to HotFixCheck.exe, of course.) I used notepad.exe because it doesn't seem to mess with the errorlevel or at least sets it to 0. I could have used just about anything, but it was the first thing I thought of. Since errorlevel was 0 after the installer ran my HotFixCheck.exe, it worked. I had to do this quickly, but that specific KB check is one of the last it runs, so I had a few seconds.
If you can't follow/understand what I did, you shouldn't be doing it. Sorry. Hopefully Microsoft will fix the issue with IE8 Beta 1 soon.
I would like to know what HotFixCheck.exe checks. I ran it through procmon, and couldn't figure out how it determines if you have a KB installed.