Working on this to-do item today.
First, adding recursion was a simple change to the render_day_index macro in macros/log.html. per jinja for loop docs
{% for child in entry.children %}
becomes:
{% for child in entry.children recursive %}
and then just before the end of the loop, we add {{ loop(child.children) }}
Once subfolders were displayed, the layout was confusing so I added the └ and some indentation.
https://dev.w3.org/html5/html-author/charref
└ └
╘ ╘
╙ ╙
╚ ╚
http://meyerweb.com/eric/tools/color-blend/#FF7F00:FBDCBF:2:hex