Comment 144 for bug 106737

I did a bit of debugging. folderPane.js:2605, folder.rename(aName, msgWindow);, calls nsImapMailFolder::Rename() which calls nsImapService::RenameLeaf() and that opens this URL via GetImapConnectionAndLoadUrl():
  "imap://<email address hidden>@server:143/rename>.INBOX.TestMessages>.INBOX.testMessages"
Later we came into nsImapIncomingServer::OnlineFolderRename() and nsImapMailFolder::RenameClient() which does indeed call nsMsgDBFolder::PropagateDelete() as a comment in the patch suggests.

So that's all very well, but there appears to be some code missing to remove the no longer existing folder from the UI.