FORE!!

# sample input:

$ ls | head -11
Desktop
Documents
Downloads
Library
Movies
Music
Pictures
Public
Sites
bin
cgi-bin

# 21-character perl script:

$ ls | head -11 | perl -pe 's{$/}{ } unless($.%2)'
Desktop
Documents Downloads
Library Movies
Music Pictures
Public Sites
bin cgi-bin
[download]

=D

(update: That version replaces the default line termination with a space. If you just want to delete the line termination (first char of line 3 immediately follows last char of line 2, etc), take the space out of the replacement block in the regex, making it a 20-character script.)

Another update: oops! just noticed that I'm not supposed to output the first line, so I either have to lengthen the perl script, or else lengthen the command line:

# using a longer perl script:

$ ls | head -11 | perl -pe '$_="" if($.==1);s{$/}{ } unless($.%2)'
Documents Downloads
Library Movies
Music Pictures
Public Sites
bin cgi-bin

# using a longer command line:

$ ls | head -11 | tail +2 | perl -pe 's{$/}{ } if($.%2)'
Documents Downloads
Library Movies
Music Pictures
Public Sites
bin cgi-bin
[download]

(The latter allows me to shorten the perl script even more, and so would be my personal favorite.)