The pattern seems to be this:
* The contents of user-dirs.dirs is ignored in kdialog.
* If $HOME/Documents exists, then always use $HOME/Documents
as the "documents" path in kdialog.
* If $HOME/Documents does not exist, then use $HOME as the
"documents" path in kdialog.
* Changing the URL in the psuedo device icon "My Documents"
has no effect on user-dirs.dirs.
* Changing the "documents" path through KControl or editing
user-dirs.dirs is never reflected in "My Documents" icon.
Bug reports 975 and 976 opened to address the issues.
Darrell