We've considered it, but it's way more Javascript than we're comfortable introducing by default. (Actually it's Arc compiled to JS, another piece of software I'd like to publish someday.) Most likely, we'd make it an option you could turn on in your profile, so you'd get the functionality without having to install an extension.
(If by folding you mean collapsing comments, that was implemented separately, as part of HN proper.)
(If by folding you mean collapsing comments, that was implemented separately, as part of HN proper.)