They've allowed any locked position on the handle for a couple years, but still say in the manual they want it down.
Baby Trend®, a leading juvenile product manufacturer, has announced that all Baby Trend infant car seats are approved for use in the back seat of a vehicle with the handle up.
Due to consumer feedback, Baby Trend has changed its policy. Crash testing of all Baby Trend infant car seats confirms that the seats meet safety standards with the handle up. In today’s smaller vehicles, a Baby Trend car seat like the Inertia Infant Car Seat with the handle up takes up the least space and is at its narrowest.
Previous policies insisted the handle be left in a rearward position to discourage parents from hanging toys or other items from the handle. In a vehicle crash, those types of items can potentially cause injury to the child.
Although Baby Trend now allows the car seat handles to be up in a vehicle, Baby Trend still recommends reading the owner’s manual prior to use and keeping the handle back, if space allows, when the car seat is in the vehicle.
http://www.prweb.com/releases/2013/10/prweb11181820.htm
So more of a 'please don't sue us if that sharp plastic busy box from another manufacturer fractures your kid's skull in a crash' warning, more than a danger from the handle.
The lockoff is nice, I think, it should lead to a lot less hassle with installs, I wish FMVSS 213 would just require them, already.