> If this turns out actually to be a problem, introduce a second wrapper EXE that you spawn, supplying environment stuff and arguments for subchild EXE. Fork, exec the wrapper, have it do its thing, then have it exec the EXE you actually want (no fork).

It doesn't have to be that complicated. After the fork, in the child, you can construct your own local environment array, and pass it to execve or one of the other exec functions that takes an environ argument. This is perfectly safe behavior in a multi-threaded program.