A new beta update of Parallels Desktop has been released that updates Parallels Desktop for Mac to Build 1862 Beta.
This update fixes the disk caching policy problem that PD Tweaker was created for. If you were wondering, PD Tweaker is perfectly safe to run with the new update and doesn't conflict with it at all. But it will be unnecessary once you have configured your VM properly.
Curiously, instead of just fixing it they decided to make it an option under the virtual machine settings -> Options -> VM flags:
Choose virtual hard disk cache policy for better performance of:
[X] Virtual machine
[ ] Mac OS X
"Virtual machine" is the default setting. For the technically-minded among you, this is like having a radio button to select between two behaviors: "incorrect" and "correct", and defaulting to "incorrect".
In this case the correct behavior is to select the second option, "Mac OS X". There are rare scenarios where you might want the other behavior, for example if you were setting up a dedicated server box that does nothing except run virtual machines. But in almost all other cases the second option is correct. I'll blog more about this later.
There are several significant other improvements, including video acceleration -- which completely eliminates the display-update lag when you're typing in Windows, hooray! All in all it seems like a very worthwhile update so far. Remember to re-install the Parallels Tools on your client OS after updating so that you get the new drivers.