The Kindle gets connected as a MTP device, so I can't actually see the folder structure on my Windows PC.
I have added {author_sort[0]}/ to my save template, which should mean that the directory will only grow by 26 more sub-folders. Hopefully this is enough to keep the directory from overflowing.
The only other option I am aware of is to scrub the Kindle and reload all the ebooks with the new directory structure. This is possible obviously, but it took me days to get the ebooks on the Kindle (and indexed) in the first place.
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