Is there something you could do with a folder subfolder structure that you can't do with sets? In my mind adopting a proper naming convention for your sets could go a long way.

Example:

You could have the following set names:

Scenery
Scenery Lakes
Scenery Lakes Water
Scenery Lakes Fish
Scenery Canyons
Scenery Canyons Grand Canyon

This would allow you to do some predictable searching and grouping but I understand it is possibly more prone to human error. It would keep you from having to move away from c5's native file management though which the more native tools you can stick with the better in my opinion.

I've made the same experience a few times. While I think "sets" are great for e-mails I'm still not a huge fan of it when working with files. It's okay for most projects but sometimes we need a hierarchy. I've got a site with several hundred file sets, it's nothing else but a mess and the structure is super clear, it's just big.

I thought about adding something on top of the current file manager which would basically create a set for each folder. I'd basically create a structure of sets that look like directories:

/bills
/projects/pending
/projects/customer_a
/projects/customer_b

We could then use some JavaScript to convert these sets into a dynamic tree. Unfortunately the problem was never big enough to actually start working on this but I'd certainly share some code if someone wants to tackle something like that.