So, While configuring a new site, I came across the 'root' setting in the navigation controlpanel. I tried using this - creating a 'subsite' and setting the path to the object.
the behavior confused me so much, I think it might be a bug, but now I'm not quite so sure.
The reason I want to call this a bug is because I would expect a configuration setting under Navigation to ONLY AFFECT NAVIGATION. When that setting starts affecting things like folder listings and the location where factories are called, I think we have a cohesion bug.
I have worked around the issue by leaving the configuration registry 'plone.root' alone, and setting the INavigationRoot interface marker on the 'folder' - which seems to be the behavior I'm looking for.
I think the culprit is here, but I haven't yet pdb'd it to be certain.: