This feature got broken somewhere along the line.
Created attachment 23814 [details]
Looks like this regressed again, see bug 25879. At least we can make automated tests for this now with bug 25852 resolved!
This didn't regress. Eric misunderstood how this works.
What Mark means is that the ChromeClient gets to decide. The Safari client only decides to handle package files. bug 25879 is related, but not the same bug, as it's about handling directories in <input> elements. We accept the drop of a directory and then fail to handle it. We should either not accept the drop or handle them if we accept them. :)