I can see what you mean, but that function was implemented to load a multitimbral instrument on a new track and automatically generate tracks for its audio outputs. So focussing on the Instruments section seems reasonable.
As for sub-folders - the function inserts the tracks below the currently-selected track, I think. If that is in a folder, then that is where the new track will go.
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However, I can drag an instrument from the FX Browser
-- to an existing TCP, track or clip
-- to the empty area below the TCPs
-- but not to the empty area below the tracks
And I can drag an effect from the FX Browser
-- to an existing TCP, track or clip
-- but not to the empty area below the TCPs or below the tracks
Dragging in an FX to create a new track would be useful
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DarkStar ... interesting, if true. . . . Inspired by ...
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