Hi, interesting thread.
The logic to associate a parent folder's Add rights to a new document and to associate both Add and Edit rights to a new subfolder (as Peter described above) is puzzling at first sight but the best solution now that I think about it. I only wished it had been described somewhere in a help document or somewhere within the module. Well...
Unfortunately I also have the problems with changing permissions and unifying them for children: sometimes it works, sometimes it doesn't - espeacially withdrawing/deleting permissions often isn't applied to children.
First I thought that withdrawing a permission for a certain role only fails if one of the documents or subfolders concerned had been created by a member of this role - in other words: with "unify on children" I cannot withdraw an author's rights? But now I did additional tests and I am not sure anymore...
Mathias