I also have been very dissatisfied with the way ASP shows all the folders and the whole path for my photos in the catalog view. I had to highlight all the folders in the catalog view to see all the photos, search for all the photos, etc. About 10 minutes ago though I discovered something in ASP that I didn't see in the documentation and never knew was there. Now my dissatisfaction about this particular issue has gone away.
I noticed a little icon in the catalog window in the left pane of ASP just to the left of the pin. I hovered the mouse pointer over it and it said: Show Subfolders. I wasn't sure exactly what that might mean, but I highlighted the catalog name and then clicked the icon. Voila! It shows all the photos in the catalog! I can't find any mention of this icon in the ASP documentation. I wish I had found this some time ago!