The Frontmatter Title plugin allows displayed titles in e.g. the file explorer to be different from the file name. E.g. I set it to {{_basename}}: {{#heading}}, which is useful for book writing when I want to keep the file paths as simple chapter numbers.
It would be nice to have something like that but for folders: ideally, by reading the frontmatter/headings/etc. from the README.md file.
Hmmm, you may be more likely to find success if you can request such a feature with a related plugin developer: GitHub - aidenlx/alx-folder-note: Add description, summary, and more info to folders with folder notes. (or some other “folder Notes” plugin)
Turns out LostPaul’s folder note plugin explicitly has front matter title integration: GitHub - LostPaul/obsidian-folder-notes: Create notes within folders that can be accessed without collapsing the folder, similar to the functionality offered in Notion.
Was a bit buggy for me (some of the settings conflict, so be careful about changing settings from the factory settings) but works exactly as I wanted.