Ahhhhhh... you're catching on
There's an empty stub for a "Groups" class in classes.php if you didn't notice. The original idea behind that is to allow you to make arbitrary or search-based groups of any photos or albums. This is exactly "smart folders" as iPhoto does them.
By this time, tagging should also be implemented, so each tag would have its own group with all its images, and you'd be able to see images with multiple tags, or do complex searches like "Tagged with Outdoors and Tree, but not with City, after 9/3/2005 with an Olympus camera." The results of that could be saved as a group, and any new images matching those criteria would show up in the group.
Of course, this is long-term stuff we're talking about. 2.0, 2.0. Probably a pretty big rewrite of the data model will have to happen first. But something to look forward to