I don't see any intrinsic problem with the plan, so long as the application operates within reasonable limits, such as:

• The number of entries created in a given directory: depending on what kind of file system it is, having many thousands of things in a single directory can be a real pain.

• The nesting depth of directories: if you're going deeper than, say, 15 levels, you should probably rethink the process.

• Overall length of a single path string: maybe your OS or various relevant apps won't really have a problem with this, but when deep nesting is combined with a verbose naming style, it becomes unwieldy and unpleasant.

• Overall quantity/size ratio of data files: I've seen people create directory trees with a million itty-bitty little data files, and believe me, it's not just ugly, it's a serious liability for everyone involved (including the sysadmins who have to run backups on it). Anything that is high-quantity/small-size needs to be in a regular database, not a directory tree.

Apart from that, I think doing capitalization is a waste of time, but that's just me.