There may be too much paranoia here.The thing is, I don't think avoiding Windows 10 is an overreaction at this point.
The default behaviour is highly intrusive. The accompanying privacy policy makes it clear that Microsoft are allowing themselves to hoover up large amounts of personal data. (The first warning sign is that desktop software even needs a privacy policy.)
The new business model, starting with giving Windows 10 away for free and aiming to make money on what you do with it instead, is a fundamental shift from previous Microsoft products under the Windows brand.
Finally, for most users, updates are now automatic and can't be turned off. That means any workarounds that are contrary to Microsoft's new business model can simply be turned off remotely by Microsoft. Nothing you configure in any settings or block in any firewall hosted on the Windows device itself can be trusted.
It's only paranoia if they're not out to get you.
Seriously, I think it is a mistake to talk non-tech family and friends out of using Windows 10. Just help them make the right privacy settings.
You can't make the right privacy settings in this context. They don't appear to exist as far as I can see, but even if they do, they can be altered against your will later. Microsoft's new business model motivates them to do exactly that, and with the Windows 10 terms and privacy policy, you are explicitly consenting to this kind of user-hostile behaviour when you install the OS.
I think it is a mistake not to talk anyone you know out of using Windows 10. You can opt out of using on-line services like Google or Facebook if you are concerned about your privacy. But if you can't even trust your own desktop OS, you essentially have no privacy at all the moment you switch on your computer. Even for a generation that thinks nothing of sharing a lot of personal thoughts and photos on social networks, that is a big step.