The below post and Sayed's help via Twitter lead to a solution and a better understanding of both the solution.
The MSBuild rules in this case are placed inside the 'Debug.pubxml' file. This is the publishing profile that requires the entire IIS directory to be writable. To make this a 'default' behavior across the project place inside the {project-name}.wpp.targets file.
Further reading : MSDN Article on Publishing Profiles (.pubxml)
+1 as above, reading the MSBuild *.targets files is very useful.
<!-- Make entire IIS directory writable -->
<Target Name="SetupCustomAcls" AfterTargets="AddIisSettingAndFileContentsToSourceManifest">
<Message Text="SetupCustomAcls" Importance="high"/>
<ItemGroup>
<MsDeploySourceManifest Include="setAcl">
<Path>$(_MSDeployDirPath_FullPath)</Path>
<setAclAccess>Modify</setAclAccess>
<setAclResourceType>Directory</setAclResourceType>
<AdditionalProviderSettings>setAclResourceType;setAclAccess</AdditionalProviderSettings>
</MsDeploySourceManifest>
</ItemGroup>
</Target>
<Target Name="DeclareCustomParameters" AfterTargets="AddIisAndContentDeclareParametersItems">
<Message Text="DeclareCustomParameters" Importance="high"/>
<ItemGroup>
<MsDeployDeclareParameters Include="CustomSetAclParam">
<Kind>ProviderPath</Kind>
<Scope>setAcl</Scope>
<Match>^$(_EscapeRegEx_MSDeployDirPath)$</Match>
<Description>Add write permission to the root folder.</Description>
<DefaultValue>{$(_MsDeployParameterNameForContentPath)}</DefaultValue>
<Value>$(_DestinationContentPath)</Value>
<Tags>Hidden</Tags>
<Priority>$(VsSetAclPriority)</Priority>
<ExcludeFromSetParameter>True</ExcludeFromSetParameter>
</MsDeployDeclareParameters>
</ItemGroup>
</Target>