Playlist folders are in fact empty playlists with a new dmap flag.
Also, determining if a playlist is empty before serving it is expensive. It means that you have to have the correct playlist count when iTunes enumerates the containerlist. I guess sizes could be updated before a containerlist is pulled.
I dunno. I’m kind of iffy on this. Doing it for static playlists wouldn’t be too bad, but I think doing it for smart playlists would be expensive.
This is a “maybe”, and might not be possible in a manner that is efficient.