We manage assets using tags, rather than folders. We have looked at restricting the view of assets to a specific project, but the work got a little bogged down with some internals of the tool.
For archiving: we support per project backups in our hosted system both manual and automated, this means projects can be removed from the dashboard.
It is also possible to export and import a project if you feel you need to fully take it off of the server. Neither of these would remove related assets from the library, but export import will bring assets into a system if they are not present.