But there should be workarounds for almost any situation with the help of a id3 tag manager.
If folders are album or artist names, sorting isn’t a problem with good tags. If you’ve got exotic folder names, just write them into one of the lesser used id3(v2) tag fields (for example put the folder name into the Componist field, and you can sort by Componist in iTunes).
All you need is a good id3-tag-manager that can update all these tags.