Took mouser's suggestion on first attempting to do a graceful terminate on the specified process by issuing a WM_CLOSE to all of its top-level windows.  A process will only be forcefully terminated if the configurable timeout (default is 3 secs) expired.  If you desire, you could set the timeout to 0 to always instant kill the selected process.

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v0.0.0.5 (July 10th, 2007)
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+ Added optional progress bar when attempting a "clean" terminate
* If a "clean" termination was successful, no confirmation warning will be
    shown.

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v0.0.0.4 (July 7th, 2007)
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* The plugin will now first attempt to do a graceful terminate on the
    specified process by issuing a WM_CLOSE.  A process will only be
    forcefully terminated if the timeout expired.
    (See: http://support.microsoft.com/kb/178893
            http://support.microsoft.com/kb/92528
            http://www.ddj.com/dept/windows/184416547)

+ Added option to specify timeout before forceful temination
    (a 0 timeout means forceful termination right off the bat)

Way to go hamradio!  Looks very nice.

Have you thought about an alternative approach where the AutoRunner is just a host for the built-in WebBrowser Control that ships with the OS?  With .NET 2.0, it's very easy to do, and you can even access your own objects through JavaScript through the window.external interface.  That way the UI/layout could be even more flexible/brandable (using html), and the EXE could be more compacter since it doesn't have to link with the jpg lib.

I think unzip would be the simplest unless the plugin installer needs to do some pre or post commands before/after the installation like deleting some old stuff etc.  Also, for unzip, how are people going to specify which target directory the zip file is going to unzip to?  Is the .dcupdate file going to specify that with a macro like %PLUGINDIR%?  Or maybe just limit themselves to unzip to the same directory as the .dcupdate file?

External EXE is also good, but then you might have different people using different installer...Inno, NSIS, MSI...., so the user-experience might not be consistent.  Also, they might all show up as entries in Add/Remove Programs.