For now the plugin works in reading and editor mode and adjust its link color (exactly like the regular links) based on the existence or non-existence of that linked folder.
On click the folder link reveals the folder in the file-explorer.
I’m happy for feedback or further suggestions, that I will introduce over time.
Great new extension thanks! Would it be possible to have the backlinks either list all of the files in the linked folder or highlight the folder in the tree like clicking the actual link does? Currently, this extension doesn’t appear to affect the backlink functionality at all so obsidian adds a backlink to a file that doesn’t exist instead of to the folder or the files within it