Works by using 'Unfiled Bookmarks' AS the bookmark sidebar. This restores the functionality of the sidebar in FF2, allowing you to arrange your bookmarks as you like.
It also reduces the wasted whitespace in the sidebar (huge compared to FF2), meaning you can make the sidebar smaller - helpful where screen size is limited (Eee PC, netbooks, etc).
If, like me, you don't use the Bookmark Menu or Toolbar items in the sidebar, there is little point in having them there.
*** NOTES ***
This extension does NOT disable the 'Bookmark Menu' or 'Bookmark Toolbar'... They still function as normal, just are not visible in the Sidebar.
May not work with other bookmark add-ons. Please report any bugs.