Modify Custom Reports without Site Modify
The ability to edit reports is based is based on assigned roles. If you create a separate folder for custom reports then you must give the users modify permission on the site so that their accounts are added into the 'ConfigMgr Report Administrators' SSRS role at the root report folder. That's a lotta permission just to edit custom reports. So ideally there'd be an RBA role permission for any report not covered by existing permissions. Really anything that disassociates that ability from modifying sites.
Marco Cibis (MS) commented
This should also include creating new reports. I agree that "site modify" gives to many permissions to report admins - especially in a large distributed environment.