If I'm not mistaken, you can actually define the settings for folders in the UI, though there is no direct link in the user interface. This is what I've done when testing:

Go to the administrative interface, go to the "Set Access Rights" page, find the folder you want to apply the settings for (the settings apply to everything under this folder), hover over the folder and write down the id.

Last, manually enter the URL to the language settings dialog with the content id noticed previously:

[site and UI root]/CMS/edit/languagesettings.aspx?id=[id]

Not the settings dialog should load and you can edit and save the settings as you would for pages.