This is the fundamental problem with Groove. You can do all this (and much more) in MediaMonkey and many other programs right now. The issue is that Groove subscription tracks do not play in or show up in other programs. There is no re-tagging of DRM tracks. You can't re-tag a Kelly Clarkson rock Christmas album as only "Christmas" so it does not play in your auto-generated "Rock" playlist.
The basic issue in all of this is tags. Some programs adjust your carefully constructed tags automatically---destroying your system. Some mis-tag. Some don't handle compilation albums (various artists---etc), some can't handle multiple disc albums. If tags were full-featured and consistent, virtual folders would be great.
I believe many users resorted to physical folders because they gave up on elaborate tagging as a solution to organization.
Whatever MS comes up with, they absolutely cannot abandon tagging. That is the gold standard of organization.