thank you for your feedback.
That's unfortunately the answer I've expected.
We use some 3rd party components on our SF 3.7 websites and their behaviour depends on that language/directory prefix. We can't change that.
Your current "SEO-friendly" implementation may make sense for completely new websites. But especially from a SEO point of view, it doesn't make sense for already indexed websites like ours. We've already figured out, that we can get the same resource with and without a leading /de/ (if German is the default language). If necessary this is fine to keep links intact. But due to the fact that the old links (with prefix) are still valid (no 404 or 301 returned) and the new navigation/sitemap/links omits this prefix, from the search engine's point of view, you'll end up with A LOT of duplicate content. And this is something we want to avoid.
As mentioned in my first post, as a workaround we use a third language as default. We decided to use Vietnamese, because the Shortcut "VI" appears on the right side of the translations column (Pages overview) which is less disturbing. However, this is in itself a really ugly "solution" and leads to other problems. In the IIS error pages section, we've set up a sitefinity page (\404) to show a user friendly message. And guess what happens in case of a 404? You're right, instead of the DE or EN localization, the default one is shown. And this is VI of course. Oh dear, this is completely nuts!
However, are there any plans at Telerik to optionally provide a directory prefix for the default language?