Firefox: Is it possible to change the number of recently used bookmark folders?

It's easy. Install the Change Bookmark Recent Folder List Length Firefox extension. It accomplishes exactly what you want.

You can get it here.

Many times, when you need Firefox to do something special or different, you can search here for an extension that will get the job done. Firefox is known to be the most customizable web browser in the world. Mozilla has unfortunately removed some important customizable items recently, but even with those changes, it is still more customizable than anything else.

It's not possible to change the number of currently visible recently used folders since the count is hardcoded in the Firefox sourcecode:

Defined in browser/components/places/content/editBookmarkOverlay.js, line 6:

const MAX_FOLDER_ITEM_IN_MENU_LIST = 5;

Used in browser/components/places/content/editBookmarkOverlay.js, line 323:

var numberOfItems = Math.min(MAX_FOLDER_ITEM_IN_MENU_LIST,
                             this._recentFolders.length);
for (var i = 0; i < numberOfItems; i++) {
  this._appendFolderItemToMenupopup(menupopup,
                                    this._recentFolders[i].folderId);
}

Used source code: ftp://ftp.mozilla.org/pub/mozilla.org/firefox/releases/34.0.5/source/firefox-34.0.5.source.tar.bz2