With respect to the issue
allows sub-folders under applications, I think this capability is absolutely required. The simplest example/reason I can give is the "ACS Subsite" application. To create a subsite you create a sub folder somewhere in your heirarchy then create a new application in that folder. After that you most likely want to create new folders under you new subsite (just like the Main Site). At that point, you need to be able to put sub-folders under applications.
There is a discussion about the UI and folders in the OpenACS 4.0 Testing forum.
