I think my preferred behavior would just be to never allow the mouse pointer off the screen. I realize you'd have to do some more advanced checking than just that for the menu bar issue and such, but if the mouse pointer can't be dragged off the sides or bottom of the screen, neither can the windows. Of course, you've probably already thought of this, and there's just something deeper going on that I'm not realizing.
Come on, obviously the preferred behavior for an Atari 8-bit computer would have to be a wrap-around screen! I'm kidding but I think that would be a hilarious easter egg or hidden feature, having the windows wrap side-to-side or top-to-bottom, so 2600.