If they're ignoring the CAS policies, it might be a tough sell to get them to dial it back, since it makes their job a little harder (or, at least, a little less forgiving). Changing security practices is always tough - like when I had to convince my boss that using the SA accounts in the SQL connection string of our web applications was a bad idea - but hang in there.
Full Trust allows the application to escalate to control of any resource on the computer. While you'd have to have a security flaw in your application to allow these, and they'll probably claim that they've prevented any escalations through astute programming, remind them that in the case that something happens, wouldn't they rather the web application didn't have control of the whole computer? I mean, just in case?
EDIT: I was a little overzealous with my language here. Full Trust would allow the application to control whatever it wants, but only if the Application Pool process has sufficient rights to do it. So if you're running as a limited user with no rights on the server except what the applicaition needs, then I suppose there's essentially no risk to "Full Trust". The reality is that the app pool owner most likely has a number of rights you wouldn't want your app to have (and in some cases, many, many more), so it's much safer to limit app security and grant additional rights needs individually to the application. Thanks for the correction, Barry.