i think this would take favorites further down a path they probably were never intended to go. i’m guessing that the old style projects are more what the iNat designers wanted to allow you to collect and categorize observations, but they probably provide a little too much functionality in some respects and are probably a little too unwieldy in many cases.
i think to achieve the ability to categorize observations, it’s better to extend the functionality of the observation subscriptions (see #2 in https://forum.inaturalist.org/t/notifications-on-inaturalist-please-share-your-ideas/374/37). then if you want to build search functionality on top of that, i think that’s probably the best path.