I agree with you that libconfig is quite bad, but that's what we're stuck with for the time being. If it was up to me, I'd convert everything to yaml, but I was too late to the party, and Hercules had already started using libconfig for some files.
The old .txt format had a lot of (parsing and future extensibility) problems, and it was overdue for an update.
I disagree with your point about the sql_connection. The most common case is to have everything in one database, and now you can do that by just editing one file. The format allows for more advanced cases using different databases of course, and it's not much harder to achieve than it used to be (or possibly easier, since the format is standardized, and it makes easier to find things, just do a folder-wide search for sql_connection and you'll find all the files that support separate configurations. You'd previously have to search for sql, db_ and possibly other words.
About the separate folders, it might be personal preference, but it feels better organized this way. If you're using any decent/modern text editor, you'd normally open the whole config folder with it, and the files to edit are just one click or keypress away, tidily organized in a nice folder tree (Vim/GVim/MacVim (
screenshot), Atom (
screenshot), Kate, TextMate, Sublime Text, Coda and possibly many more allow you to do that. If you're stuck with the old notepad++ and it still forces you to open all files separately, maybe it's time to start looking around for alternatives)
On a side note, the files in the import folder are still all in one place.
Could the file format and structure be done better? Probably. Are we still in time to do improve it? Of course. Got specific suggestions? Post them in the bugtracker. Complaining that something sucks is pointless, just say how you'd improve it.