Wouldn't it make more sense to try to use something Lispy as your base, encoding sexprs into folder structure, considering that sexprs afaik can already be considered trees.
The fact that this is not Lispy is more surprising than the concept itself.
And then make an OS out of it.
One problem is is that #1=(a . #1#) would panic the kernel and require a full fsck.
Finally, a scripting language that captures the essence of Windows as much as Perl captures the essence of Linux.
I'm kind of disappointed that the folder names actually have to contain the code. From the title, I got the wild phantasm of a language entirely encoded into folder structure - ignoring their names completely. Maybe it would be "Pure Folders".