That may work - IF you create a connection from scratch. People mostly
does not do this and I am not going to require my users to learn how to
do this either.

The normal way of connecting with wireless is to select a connection
from the list. If this is a "secure" connection the user is required to
provide a password. There are no options "Available to all users" in
that dialog and if you do not have rights in
org.freedesktop.NetworkManager.settings.modify.system you will not be
able to create that connection.

And the behaviour you describe is also not what I experience. I created
a wireless connection and removed "Available to all user". NM still
stores the password in /etc. IT just adds another option which tells who
can user it:

[connection]
id=test
uuid=8e585656-1ca1-42a2-8172-8341a1d052c5
type=802-11-wireless
permissions=user:ism001:;

[802-11-wireless]
ssid=test
mode=infrastructure
mac-address=08:11:96:C2:02:B4
security=802-11-wireless-security

[802-11-wireless-security]
key-mgmt=wpa-eap
wep-key-flags=1
psk-flags=1
leap-password-flags=1

[ipv4]
method=auto

[ipv6]
method=auto

[802-1x]
eap=peap;
identity=username
phase2-auth=mschapv2
password=mypassword
password-raw-flags=1

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https://bugs.launchpad.net/bugs/1060907

Title:
  NetworkManager stores wifi passwords in plain text

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