Steps to reproduce problem:
1) Edit a page in Pages.
2) Add a component with at least one LinkFieldDefinition pointing at dam
3) Click "Select New"
4) Choose a folder for which you have read-only permission
5) See that the upload button is enabled
6) Click upload button
7) Choose a file from your operating system's file chooser
8) Wait for file to upload to server
9) Receive "Access Denied" error message

Desired Outcome:
5) See that the upload button is disabled
6) Figure out that you need to pick a folder on which you have write permission

This problem is even worse in our situation where none of our editors have write permission on the root node. They finish step 3, see a perfectly good upload button, and don't even think about maybe selecting a folder, and then are completely befuddled by the Access Denied message.

I don't know what the best solution is but I've provided the one I will be using until you guys pick up this ticket.