but without a folding editor, it can get ugly

I'm curious... Do you have a folding printer? A folding 'grep'? Folding revision control diff/log/pickaxe tools? A folding merge tool? Do you never do anything with code other than "edit" it?

Even the old argument of "nobody updates the documentation unless it is within a few lines of the code that it documents" doesn't make sense for tests... unless you rarely run your tests.

I think I'll stick with keeping my test code in a separate directory tree and running the tests at least before any release / deploy. I like to be able to pickaxe for any changes to calls to the fooBiff() method either excluding test code, or including test code, or only in test code. I like being able to tell that nobody touched the Foo::Biff implementation in this release. I like to be able to see how much work is being spent on fixing unit tests, especially when the immediate implementation wasn't touched.

Do you just hardly ever do such things? Or do you not find having your test code jumbled around with your implementation code makes such things much harder? Or do you find it harder but find the juxtaposition of test and code outweighs such hurdles?

I think somebody should write a "merging" editor feature so you can keep your different types of text in separate files for all of your tools that aren't your editor and then teach your editor how to shuffle the appropriate parts of the disparate files together on the screen when editing. :)