Sorry about my confusing post...
The Navigation->Attach actually works when TabProcGrowth is set, even with multiple IE copies running.
But if I close all IE, Attach obviously fails, and that's fine. But when Navigation->Launch is called (with no IE running), it throws the 0x80070012 exception. This is with both USER and LOCAL Machine's TabProcGrowth set (0 and Medium, respectively).