Adding CloseApplication elements causes only a reboot prompt, it should also cause the FilesInUseDialog to be shown to the user.
In WiX sources in CloseApp.cpp there is a section that is commented out with a note:
//
// Do the UI dance now.
//
/*
TODO: Do this eventually
(...)
*/
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Opened feature request http://sourceforge.net/tracker/index.php?func=detail&aid=1989218&group_id=105970&atid=642717.