Woo, thanks for the shoutout to Ten Megabyte Manifesto [0] again. 20 megabytes is likely a good thing (and I guess I have to update my manifesto a little bit! though I maintain that you can still build quality stuff in under 10MB of html/css/js), and the promise of a better upload interface is great too. I'm hoping you'll choose to/be able to implement directory support but any improvement in the meantime is great. Keep up the good work.
Directories are not impossible, I'm just not sure how to make the interface for them look good and work well. It's more a UX problem than a coding one. I would love some suggestions/sketches/wireframes to improve the editing dashboard to enable this. Please send me an e-mail if you have any ideas here.
Yeah I agree it's not a simple suggestion on my part. I'm by no means an expert on UI/UX and so I'm a bit out of my depth here, but I'm hoping that someone can suggest a design that lends itself well to this. In the meantime, while it's way more complicated than what you're going for, dropbox's upload interface might be worth looking at.
[0] http://10mbmanifesto.neocities.org/