Contacts On Windows Violating Window Warranty?

Yes, I have been told this several times by builders of high-end homes. To get around this, we have been specifying the smallest surface mounted contacts that we can find (such as the Interlogix 1035 series). These are adhesive mounted on the corner of the window and frame. Wiring is run through the wood or sheet rock frame around the window so the window itself is never penetrated.

Doesn't look bad, particularly if the contact and magnet are painted to match the window/frame.

Yes, I have heard this.  The window mfgr often will void the warranty on thermal seals and frames like you mention.  In general, vinyl/aluminum/composite windows do not allow for alarm contact modification, but many wood frame windows will.

In my experience, the mfgr tells you to use surface mounted and adhesive backed wireless sensors.  Or you just throw caution to the wind and disregard the objection/ hope there is not an issue.  Which is not a great option in many cases.

I've heard the same thing, but I've never actually heard of the threat being carried out.