So coming back to this (because I was setting some more stuff up), it seems that Windows DHCP Server does understand the RFC, that is why it actually sees and uses the entire machine ID sent by default.
It is other devices like my EdgeRouters that I have to use the MAC address.
The only problem with the machine ID scheme is that I have no idea what it is before the machine is created.
Granted this is mostly my problem because I always use DHCP reservations instead of static IP addresses (evil fucking things, those).
I continue to force the new systems to use the hardware ID, because I want to only track the MAC address hex info.