Yes, that is standard Grails operation. Looking at the source code (grails_home/scripts/Init.groovy, line 55) it would appear that is you set the GrailsApplication.WORK_DIR system property that it will use that location instead. You can set this in grails_home/bin/startGrails.bat. For example, you could add the following line to the block of script statements that set JAVA_OPTS:
set JAVA_OPTS=%JAVA_OPTS% -DGrailsApplication.WORK_DIR=C:\some\other\dir
I have not tried it, so no guarantees that it will work...
In case you are still looking. The System Property isn't GrailsApplication.WORK_DIR that is a variable pointing to the correct property name. The correct property name is grails.work.dir so your startGrails.bat will include this line:
set JAVA_OPTS = %JAVA_OPTS -Dgrails.work.dir=\path\for\you