It allows it, but I shouldn't bother. This really isn't a MCE vs MC12 problem, this is just MCE going wild with your MP3 collection.
What I'm talking about is this (take a big breath); When you setup MSMC it will ask you what folders to "watch" or "stop watching" - it appears no matter how many times you deselect your "Music", "Pictures", "Videos" folders they just reappear in the list, and MSMC will import everything in there into its library. Then, for some inexplicable reason, it will take the cover art that is inside your MP3's and overwrite (yes, overwrite) your nice high quality Folder.jpg with a really rubbish 200x200 Folder.jpg, whilst at the same time making it system and hidden. Also, it will create an even crappier version called AlbumArtSmall.jpg, also system and hidden. Any MP3 file with empty tags "Composer", "Band" or "Preference"? It will attempt to fill those tags from the internet, for the most part inaccurately. This is with CD and media info automatic internet download option turned OFF. With Auto-download turned ON any MP3 with no cover art inside the tags MSMC will download from the internet some inappropriate crappy cover art and stick it in there, completely ignoring any Folder.jpg you may have in the folder and overwrites that same Folder.jpg in the process with the crappy one it's just downloaded!
Delicious, eh?
I also think it goes off and does some kind of replay gain as well, because I've noticed a lot of indiscernible external file changes during auto-imports in MC.
The way I've got around most of this is to rename all my Folder.jpg's to AlbumArtLarge.jpg, place all those cover arts inside my files and fill the "Band" tag with "Album Artist (auto)" and "Composer" tag with "Artist". That pretty much leaves MSMC with nothing to do except create lots of rubbish Folder.jpg's and AlbumArtSmall.jpg's all over the show, which it then proceeds to use in the music browsing display (yuck).
All for a pretty display and use of the MC remote (in my case) - decide for yourself if it's worth it. I wouldn't have bothered if I'd known what I was letting myself in for - she IS the prettiest girl at the party but, like my friends used to warn me, that girl's high maintenance.