By default IMAP-UW will allow users to traverse the filesytem and access any file that 
they could access locally, including /etc/passwd etc. For providers giving out accounts for mail only this creates an unneccesary risk.
See http://www.washington.edu/imap/IMAP-FAQs/index.html#5.1 for vendor description, it's simply insecurity by design.

Fix: 

Change line 47 in src/osdep/unix/env_unix.c from:
  static short restrictBox = NIL; /* is a restricted box */
to:
  static short restrictBox = -1;  /* is a restricted box */
How-To-Repeat: There are many methods to access this, here are two simple ones:

Using squirrelmail see http://www.securityfocus.com/bid/7952

Using scripts from http://www.security.nnov.ru/files/imaptools.tgz
imapget.c - to retrieve file via imap-uw, usage example:
imapget imap.host.name /etc/passwd > passwd
it should work for both text and binary files.