As far as I know, everyone hates the “Browse for Folder” dialog:
This dialog is always too small, rarely remembers locations well, and worst of all: forces you to navigate your entire computer using a tedious tree structure.
Now, to be fair, some of the problems are likely to do with how apps are invoking the control — not setting a size or a default directory, etc. But the problem about the tedious tree control remains.
Is there any way to customize your Windows installation to use a different control? Preferably an app/installer that does it for you safely, but dropping in a compatible DLL or similar technique would be okay too.
Or are we stuck with this terrible control forever?
short answer, yes you are stuck with it
the function you are mentioning is the SHBrowseForFolder() function in Shell32.dll. This function is linked and executed from thousands of programs, so unless you are writing a specific program that you want a modified dialog for, what you desire will not be possible without modifying or replacing shell32.dll (which is for all intents and purposes, beyond the scope of this site).
here is the documentation for the function:
if you simply want to change it within a program you are writing, search for the specifics of your langague/platform to find tutorials (they are copious).