diff --git a/browser/components/places/content-shim/browserShim.xul b/browser/components/places/content-shim/browserShim.xul
index 716fed802bc3..0816b7be7013 100755
--- a/browser/components/places/content-shim/browserShim.xul
+++ b/browser/components/places/content-shim/browserShim.xul
@@ -1,6 +1,7 @@
 <?xml version="1.0"?>
 
 <?xml-stylesheet href="chrome://browser/content/places/browserShim.css"?>
+<?xml-stylesheet href="chrome://browser/skin/places/places.css"?>
 
 <!DOCTYPE overlay SYSTEM "chrome://browser/locale/places/places.dtd">
 
diff --git a/browser/components/places/content/controller.js b/browser/components/places/content/controller.js
index 176c92ab77d0..e8984ac10bed 100755
--- a/browser/components/places/content/controller.js
+++ b/browser/components/places/content/controller.js
@@ -1305,11 +1305,17 @@ var PlacesController = {
   /**
    * Get a TransferDataSet containing the content of the selection that can be
    * dropped elsewhere. 
+   * @param   dragAction
+   *          The action to happen when dragging, i.e. copy
    * @returns A TransferDataSet object that can be dragged and dropped 
    *          elsewhere.
    */
-  getTransferData: function PC_getTransferData() {
-    var nodes = this._activeView.getCopyableSelection();
+  getTransferData: function PC_getTransferData(dragAction) {
+    var nodes = null;
+    if (dragAction == Ci.nsIDragService.DRAGDROP_ACTION_COPY)
+      nodes = this._activeView.getCopyableSelection();
+    else
+      nodes = this._activeView.getDragableSelection();
     var dataSet = new TransferDataSet();
     for (var i = 0; i < nodes.length; ++i) {
       var node = nodes[i];
@@ -1450,10 +1456,15 @@ var PlacesController = {
  * Drop functions are passed the view that is being dropped on. 
  */
 var PlacesControllerDragHelper = {
+  /**
+   * DOM Element currently being dragged over
+   */
+  currentDropTarget: null,
+   
   /**
    * @returns The current active drag session. Returns null if there is none.
    */
-  _getSession: function VO__getSession() {
+  getSession: function VO__getSession() {
     var dragService = 
         Cc["@mozilla.org/widget/dragservice;1"].
         getService(Ci.nsIDragService);
@@ -1476,7 +1487,7 @@ var PlacesControllerDragHelper = {
         !PlacesController.nodeIsFolder(parent))
       return false;
   
-    var session = this._getSession();
+    var session = this.getSession();
     if (session) {
       if (orientation != NHRVO.DROP_ON)
         var types = view.supportedDropTypes;
@@ -1531,7 +1542,7 @@ var PlacesControllerDragHelper = {
    */
   onDrop: function PCDH_onDrop(sourceView, targetView, insertionPoint, 
                                visibleInsertCount) {
-    var session = this._getSession();
+    var session = this.getSession();
     var copy = session.dragAction & Ci.nsIDragService.DRAGDROP_ACTION_COPY;
     var transactions = [];
     var xferable = this._initTransferable(targetView, 
diff --git a/browser/components/places/content/menu.xml b/browser/components/places/content/menu.xml
index 4c34313d9543..2cdf7b204bb8 100755
--- a/browser/components/places/content/menu.xml
+++ b/browser/components/places/content/menu.xml
@@ -51,8 +51,6 @@
       
       <field name="_selection">null</field>
       
-      <field name="_result">null</field>
-      <filed name="_resultNode">null</filed>
       <method name="setResultAndNode">
         <parameter name="result"/>
         <parameter name="resultNode"/>
@@ -68,29 +66,53 @@
         ]]></body>
       </method>
       
+      <!-- These are the indices of the start and end
+           of dynamic content in the menu.  For index,
+           if this is a bookmark menu and it has two
+           static entries at the top, "Bookmark this page"
+           and "Bookmark all tabs", _startMarker will be
+           2.  If it has an "open in tabs" item at the end,
+           _endMarker will be the index of that item.
+           If there is no static content in the menu,
+           _startMarker and _endMarker are -1. -->
+      <field name="_startMarker">-1</field>
+      <field name="_endMarker">-1</field>
+      
       <method name="_cleanMenu">
         <body><![CDATA[
-          var foundStartMarker = false;
-          var foundEndMarker = false;
+          // Find static menuitems that should go at the start
+          // and end of the menu, marked by builder="start" and
+          // builder="end" attributes, and keep track of their indices.
+          // All of the items between the start and end should be removed.
           var items = [];
+          this._startMarker = -1;
+          this._endMarker = -1;
           for (var i = 0; i < this.childNodes.length; ++i) {
             var item = this.childNodes[i];
             if (item.getAttribute("builder") == "start") {
-              foundStartMarker = true;
+              this._startMarker = i;
               continue;
             }
             if (item.getAttribute("builder") == "end") {
-              foundEndMarker = true;
+              this._endMarker = i;
               continue;
             }
-            if (foundStartMarker && !foundEndMarker) 
+            if ((this._startMarker != -1) && (this._endMarker == -1)) 
               items.push(item);
           }
+          
+          // If static items at the beginning were found, remove all items between
+          // them and the static content at the end.
           for (var i = 0; i < items.length; ++i)
             items[i].parentNode.removeChild(items[i]);
-          if (!foundStartMarker && !foundEndMarker) {
-            while (this.hasChildNodes())
-              this.removeChild(this.firstChild);
+            
+          // If no static items were found at the beginning, remove all items before
+          // the static items at the end.
+          if (this._startMarker == -1) {
+            var end = (this._endMarker == -1) ? this.childNodes.length - 1 : this._endMarker - 1;
+            for (var i = end; i >=0; i--) {
+              this.removeChild(this.childNodes[i]);
+            }
           }
           LOG("KIDS = " + this.childNodes.length);
         ]]></body>
@@ -98,6 +120,13 @@
       
       <method name="_rebuild">
         <body><![CDATA[
+          // Make sure not to hold onto any references to menu nodes when we
+          // rebuild, since rebuilding deletes all the nodes in the menu and
+          // re-adds them.  If we use a reference to a deleted node, all kinds
+          // of exceptions and asserts will fire.
+          if (this._DNDObserver._overFolder.node)
+            this._DNDObserver._clearOverFolder();
+            
           this._cleanMenu();
           const XULNS = "http://www.mozilla.org/keymaster/gatekeeper/there.is.only.xul";
           if (PlacesController.nodeIsContainer(this._resultNode))
@@ -134,23 +163,49 @@
               // else if (nodeIsQuery) ... add menu to build kids
               if (element) {
                 element.node = child;
-                this.appendChild(element);
+                
+                // Add the new element to the menu.  If there is static content at
+                // the end of the menu, add the element before that.  Otherwise,
+                // just add to the end.
+                if (this._endMarker != -1)
+                  this.insertBefore(element, this.childNodes[this._endMarker++]);
+                else
+                  this.appendChild(element);
               }
               if (child.icon)
                 element.setAttribute("image", child.icon.spec);
             }
           } else {
-            var bundle = document.getElementById("placeBundle");
-            var label = bundle.getString("bookmarksMenuEmptyFolder");
-            var element = null;
-            element = document.createElementNS(XULNS, "menuitem");
-            element.setAttribute("label", label);
-            element.setAttribute("disabled", true);
-            this.appendChild(element);
+            // This menu is empty.  If there is no static content, add
+            // an element to show it is empty.
+            if (this._startMarker == -1 && this._endMarker == -1) {
+              var bundle = document.getElementById("placeBundle");
+              var label = bundle.getString("bookmarksMenuEmptyFolder");
+              var element = null;
+              element = document.createElementNS(XULNS, "menuitem");
+              element.setAttribute("label", label);
+              element.setAttribute("disabled", true);
+              this.appendChild(element);
+            }
           }
         ]]></body>
       </method>
       
+      <!-- Sometimes calling hidePopup() on a menu can leave submenus
+           open.  This calls hidePopup() on the menu and recursively
+           hides its submenus as well. -->
+      <method name="hidePopupAndChildPopups">
+        <body><![CDATA[
+          for (var i = 0; i < this.childNodes.length; i++) {
+            if (this.childNodes[i].getAttribute("type") == "menu" &&
+                this.childNodes[i].lastChild &&
+                this.childNodes[i].lastChild.getAttribute("type") == "places")
+              this.childNodes[i].lastChild.hidePopupAndChildPopups();
+          }
+          this.hidePopup();
+        ]]></body>
+      </method>
+      
       <property name="isBookmarks">
         <getter><![CDATA[ 
           return PlacesController.nodeIsFolder(this.getResult());
@@ -182,7 +237,15 @@
       </method>
       
       <method name="getCopyableSelection">
-        <body><![CDATA[ 
+        <body><![CDATA[
+          return this.getSelectionNodes();
+        ]]></body>
+      </method>
+      
+      <method name="getDragableSelection">
+        <body><![CDATA[
+          if (PlacesController.nodeIsReadOnly(this._resultNode))
+            return null;
           return this.getSelectionNodes();
         ]]></body>
       </method>
@@ -250,6 +313,263 @@
         <body><![CDATA[
         ]]></body>
       </method>
+      
+      <field name="_DNDObserver"><![CDATA[({
+        // Inside the _DNDObserver object's functions, this points to 
+        // the _DNDObserver object.  _self points to the menu xbl object.
+        _self: this,
+        // Subfolders should be opened when the mouse drags over them, and closed
+        // when the mouse drags off.  The overFolder object manages opening and closing
+        // of folders when the mouse hovers.
+        _overFolder: {node: null, openTimer: null, hoverTime: 350, closeTimer: null},
+        // If this menu's parent auto-opened it because it was dragged over, but didn't
+        // close it because the mouse dragged into it, the menu should close itself
+        // onDragExit.  This timer is set in dragExit to close the menu.
+        _closeMenuTimer: null,
+        
+        _setTimer: function TBV_DO_setTimer(time) {
+          // There is a problem in Windows where timers don't fire while the
+          // mouse is dragging.  QI-ing the timer to nsITimerInternal and setting
+          // idle to false makes the timer fire.
+          var timer = Cc["@mozilla.org/timer;1"].createInstance(Ci.nsITimer);
+          timer.initWithCallback(this, time, timer.TYPE_ONE_SHOT);
+          timer.QueryInterface(Ci.nsITimerInternal);
+          timer.idle = false;
+          return timer;
+        },
+        
+        // Function to process all timer notifications.
+        notify: function TBV_DO_notify(timer) {
+        
+          // Timer to open a submenu that's being dragged over.
+          if (timer == this._overFolder.openTimer) {
+            this._overFolder.node.lastChild.setAttribute("autoopened", "true");
+            this._overFolder.node.lastChild.showPopup(this._overFolder.node);
+            this._overFolder.openTimer = null;
+          }
+          
+          // Timer to close a submenu that's been dragged off of.
+          if (timer == this._overFolder.closeTimer) {
+            // Only close the submenu if the mouse isn't being dragged over any
+            // of its child menus.
+            var draggingOverChild = this._draggingOverChildNode(this._overFolder.node);
+            if (draggingOverChild)
+              this._overFolder.node = null;
+            this._clearOverFolder();
+            
+            // Close any parent folders which aren't being dragged over.
+            // (This is necessary because of the above code that keeps a folder
+            // open while its children are being dragged over.)
+            if (!draggingOverChild)
+              this._closeParentMenus();
+          }
+          
+          // Timer to close this menu after the drag exit.
+          if (timer == this._closeMenuTimer) {
+            if (!this._draggingOverChildNode(this._self)) {
+              this._self.hidePopupAndChildPopups();
+              // Close any parent menus that aren't being dragged over;
+              // otherwise they'll stay open because they couldn't close
+              // while this menu was being dragged over.
+              this._closeParentMenus();
+            }
+          }
+        },
+        
+        // Helper function that determines if the mouse is currently being dragged
+        // over a child node of this menu.  This is necessary so that the menu
+        // doesn't close while the mouse is dragging over one of its submenus.
+        _draggingOverChildNode: function TBV_DO_draggingOverChildNode(node) {
+          var currentNode = PlacesControllerDragHelper.currentDropTarget;
+          while (currentNode) {
+            if (currentNode == node)
+              return true;
+            currentNode = currentNode.parentNode;
+          }
+          return false;
+        },
+        
+        // Helper function to close all parent menus of this menu,
+        // as long as none of the parent's children are currently being
+        // dragged over.
+        _closeParentMenus: function TBV_DO_closeParentMenus() {
+          var parent = this._self.parentNode;
+          while(parent) {
+            if (parent.nodeName == "menupopup" &&
+                parent.getAttribute("type") == "places") {
+              if (this._draggingOverChildNode(parent.parentNode))
+                break;
+              parent.hidePopup();
+            }
+            parent = parent.parentNode;
+          }
+        },
+        
+        // The mouse is no longer dragging over the stored menubutton.
+        // Close the menubutton, clear out drag styles, and clear all
+        // timers for opening/closing it.
+        _clearOverFolder: function TBV_DO_clearOverFolder() {
+          if (this._overFolder.node && this._overFolder.node.lastChild) {
+            if (!this._overFolder.node.lastChild.hasAttribute("dragover"))
+              this._overFolder.node.lastChild.hidePopupAndChildPopups();
+            this._overFolder.node = null;
+          }
+          if (this._overFolder.openTimer) {
+            this._overFolder.openTimer.cancel();
+            this._overFolder.openTimer = null;
+          }
+          if (this._overFolder.closeTimer) {
+            this._overFolder.closeTimer.cancel();
+            this._overFolder.closeTimer = null;
+          }
+        },
+        
+        // This function returns information about where to drop when
+        // dragging over this menu--insertion point, child index to drop
+        // before, and folder to drop into.
+        _getDropPoint: function TBV_DO_getDropPoint(event) {
+          // Can't drop if the menu isn't a folder
+          var resultNode = this._self._resultNode;
+          if (!PlacesController.nodeIsFolder(this._self._result.root) ||
+              !PlacesController.nodeIsFolder(resultNode))
+            return null;
+          asFolder(resultNode);
+          
+          var dropPoint = { ip: null, beforeIndex: null, folderNode: null };
+          // Loop through all the nodes to see which one this should
+          // get dropped in/above/below.
+          // Ignore static content at the top and bottom of the menu.
+          var start = (this._self._startMarker != -1) ? (this._self._startMarker + 1) : 0;
+          var end = (this._self._endMarker != -1) ? this.self._endMarker : this._self.childNodes.length;
+          for (var i = start; i < end; i++) {
+            var xulNode = this._self.childNodes[i];
+            var nodeY = xulNode.boxObject.y - this._self.boxObject.y;
+            var nodeHeight = xulNode.boxObject.height;
+            if (xulNode.node &&
+                PlacesController.nodeIsFolder(xulNode.node) &&
+                !PlacesController.nodeIsReadOnly(xulNode.node)) {
+              // This is a folder. If the mouse is in the top 25% of the
+              // node, drop above the folder.  If it's in the middle
+              // 50%, drop into the folder.  If it's past that, drop below.
+              if (event.clientY < nodeY + (nodeHeight * 0.25)) {
+                // Drop above this folder.
+                dropPoint.ip = new InsertionPoint(resultNode.folderId, i - start, -1);
+                dropPoint.beforeIndex = i;
+                return dropPoint;
+              }
+              else if (event.clientY < nodeY + (nodeHeight * 0.75)) {
+                // Drop inside this folder.
+                dropPoint.ip = new InsertionPoint(asFolder(xulNode.node).folderId, -1, 1);
+                dropPoint.beforeIndex = i;
+                dropPoint.folderNode = xulNode;
+                return dropPoint;
+              }
+            } else{
+              // This is a non-folder node. If the mouse is above the middle,
+              // drop above the folder.  Otherwise, drop below.
+              if (event.clientY < nodeY + (nodeHeight / 2)) {
+                // Drop above this bookmark.
+                dropPoint.ip = new InsertionPoint(resultNode.folderId, i - start, -1);
+                dropPoint.beforeIndex = i;
+                return dropPoint;
+              }
+            }
+          }
+          // Should drop below the last node.
+          dropPoint.ip = new InsertionPoint(resultNode.folderId, -1, 1);
+          dropPoint.beforeIndex = -1;
+          return dropPoint;
+        },
+        
+        // This function clears all of the dragover styles that were set when
+        // a menuitem was dragged over.
+        _clearStyles: function TBV_DO_clearStyles() {
+          this._self.removeAttribute("dragover");
+          for (var i = 0; i < this._self.childNodes.length; i++) {
+            this._self.childNodes[i].removeAttribute("dragover-top");
+            this._self.childNodes[i].removeAttribute("dragover-bottom");
+            this._self.childNodes[i].removeAttribute("dragover-into");
+          }
+        },
+        
+        onDragStart: function TBV_DO_onDragStart(event, xferData, dragAction) {
+          PlacesController.activeView = this._self;
+          this._self._selection = event.target.node;
+          if (event.ctrlKey)
+            dragAction.action = Ci.nsIDragService.DRAGDROP_ACTION_COPY;
+          xferData.data = PlacesController.getTransferData(dragAction.action);
+        },
+        
+        canDrop: function TBV_DO_canDrop(event, session) {
+          return PlacesControllerDragHelper.canDrop(this._self, -1);
+        },
+        
+        onDragOver: function TBV_DO_onDragOver(event, flavor, session) {
+          PlacesControllerDragHelper.currentDropTarget = event.target;
+          var dropPoint = this._getDropPoint(event);
+          if (dropPoint == null)
+            return;
+          
+          this._clearStyles();
+          if (dropPoint.folderNode) {
+            // Dragging over a folder; set the appropriate styles.
+            if (this._overFolder.node != dropPoint.folderNode) {
+              this._clearOverFolder();
+              this._overFolder.node = dropPoint.folderNode;
+              this._overFolder.openTimer = this._setTimer(this._overFolder.hoverTime);
+            }
+            dropPoint.folderNode.setAttribute("dragover-into", "true");
+          }
+          else {
+            // Dragging over a menuitem, set dragover-top/bottom to show where
+            // the item will be dropped and clear out any old folder info.
+            if (dropPoint.beforeIndex == -1) {
+              if (this._self.endMatch)
+                this._self.childNodes[this._self.endMatch].setAttribute("dragover-top", "true");
+              else
+                this._self.lastChild.setAttribute("dragover-bottom", "true");
+            }
+            else {
+              this._self.childNodes[dropPoint.beforeIndex].setAttribute("dragover-top", "true");
+            }
+            // Clear out old folder information
+            this._clearOverFolder();
+          }
+          this._self.setAttribute("dragover", "true");
+        },
+        
+        onDrop: function TBV_DO_onDrop(event, dropData, session) {
+          var dropPoint = this._getDropPoint(event);
+          if (dropPoint == null)
+            return;
+          PlacesController.activeView = this._self;
+          PlacesControllerDragHelper.onDrop(null, this._self,
+                                            dropPoint.ip, 1);
+          this._self._rebuild();
+        },
+        
+        onDragExit: function TBV_DO_onDragExit(event, session) {
+          PlacesControllerDragHelper.currentDropTarget = null;
+          this._clearStyles();
+          // Close any folder being hovered over
+          if (this._overFolder.node)
+            this._overFolder.closeTimer = this._setTimer(this._overFolder.hoverTime);
+          // The autoopened attribute is set when this folder was automatically
+          // opened after the user dragged over it.  If this attribute is set,
+          // auto-close the folder on drag exit.
+          if (this._self.hasAttribute("autoopened"))
+            this._closeMenuTimer = this._setTimer(this._overFolder.hoverTime);
+        },
+        
+        getSupportedFlavours: function TBV_DO_getSupportedFlavours() {
+          var flavorSet = new FlavourSet();
+          for (var i = 0; i < this._self.supportedDropTypes.length; ++i)
+            flavorSet.appendFlavour(this._self.supportedDropTypes[i]);
+          return flavorSet;
+        },
+        
+      })]]></field>
+      
     </implementation>
     <handlers>
       <handler event="popupshowing">
@@ -263,16 +583,35 @@
             this._resultNode.QueryInterface(Ci.nsINavHistoryContainerResultNode);
             this._resultNode.containerOpen = false;
           }
+          // The autoopened attribute is set for folders which have been
+          // automatically opened when dragged over.  Turn off this attribute
+          // when the folder closes because it is no longer applicable.
+          this.removeAttribute("autoopened");
         }
       </handler>
       <handler event="click"><![CDATA[
-        if (event.target.localName != "menuitem" &&
-            event.target.localName != "menu")
+        if ((event.target.localName != "menuitem" &&
+             event.target.localName != "menu") ||
+            event.target.parentNode != this)
           return;
         this._selection = event.target.node;
         PlacesController.activeView = this;
         PlacesController.mouseLoadURI(event);
       ]]></handler>
+      <handler event="draggesture"><![CDATA[
+        if (event.target.localName == "menuitem")
+          // TODO--allow menu drag if shift (or alt??) key is down
+          nsDragAndDrop.startDrag(event, this._DNDObserver);
+      ]]></handler>
+      <handler event="dragover"><![CDATA[
+        nsDragAndDrop.dragOver(event, this._DNDObserver);
+      ]]></handler>
+      <handler event="dragdrop"><![CDATA[
+        nsDragAndDrop.drop(event, this._DNDObserver);
+      ]]></handler>
+      <handler event="dragexit"><![CDATA[
+        nsDragAndDrop.dragExit(event, this._DNDObserver);
+      ]]></handler>
     </handlers>
   </binding>
 
diff --git a/browser/components/places/content/toolbar.xml b/browser/components/places/content/toolbar.xml
index b56602a8008d..b0827d9e6419 100755
--- a/browser/components/places/content/toolbar.xml
+++ b/browser/components/places/content/toolbar.xml
@@ -7,6 +7,32 @@
           xmlns:xul="http://www.mozilla.org/keymaster/gatekeeper/there.is.only.xul">
 
   <binding id="places-bar">
+    <resources>
+      <stylesheet src="chrome://browser/skin/places/places.css"/>
+    </resources>
+    
+    <content>
+      <xul:vbox>
+        <xul:hbox class="toolbar-drop-indicator-bar">
+          <xul:hbox class="toolbar-drop-indicator"/>
+        </xul:hbox>
+        <xul:hbox flex="1">
+          <children/>
+          <xul:hbox mousethrough="always"
+                    flex="1"
+                    pack="end">
+            <xul:toolbarbutton type="menu"
+                               class="chevron"
+                               mousethrough="never"
+                               collapsed="true">
+              <xul:menupopup type="places"
+                             context="placesContext"/>
+            </xul:toolbarbutton>
+          </xul:hbox>
+        </xul:hbox>
+      </xul:vbox>
+    </content>
+    
     <implementation>
       <constructor><![CDATA[ 
       ]]></constructor>
@@ -40,6 +66,9 @@
         this._rebuild();
         ]]></body>
       </method>
+
+      <field name="_dropIndicatorBar">document.getAnonymousNodes(this)[0].firstChild</field>
+      <field name="_chevron">document.getAnonymousNodes(this)[0].childNodes[1].firstChild.firstChild</field>
       
       <field name="_selection">null</field>
       
@@ -52,12 +81,17 @@
         ]]></body>
       </method>
       
-      <field name="_chevron">null</field>
       <method name="_rebuild">
         <body><![CDATA[
+          // Clear out references to existing nodes, since we'll be deleting and re-adding.
+          if (this._DNDObserver._overFolder.node)
+            this._DNDObserver._clearOverFolder();
+          this._openedMenuButton = null;
+        
           while (this.hasChildNodes())
             this.removeChild(this.firstChild);
           const XULNS = "http://www.mozilla.org/keymaster/gatekeeper/there.is.only.xul";
+          this._result.root.containerOpen = true;
           var cc = this._result.root.childCount;
           for (var i = 0; i < cc; ++i) {
             var child = this._result.root.getChild(i);
@@ -84,18 +118,7 @@
             this.appendChild(button);
           }
           
-          var overflowPadder = document.createElementNS(XULNS, "hbox");
-          overflowPadder.setAttribute("mousethrough", "always");
-          overflowPadder.setAttribute("flex", "1");
-          overflowPadder.setAttribute("pack", "end");
-          this.appendChild(overflowPadder);
-          this._chevron = document.createElementNS(XULNS, "toolbarbutton");
-          this._chevron.setAttribute("type", "menu");
-          this._chevron.setAttribute("class", "chevron");
-          this._chevron.setAttribute("mousethrough", "never");
-          this._chevron.setAttribute("collapsed", "true");
-          overflowPadder.appendChild(this._chevron);
-          var popup = document.createElementNS(XULNS, "menupopup");
+          var popup = this._chevron.firstChild;
           popup.setAttribute("type", "places");
           // This is set here and not in the XBL constructor for the menu because
           // it doesn't get initialized properly in the constructor.
@@ -104,7 +127,6 @@
           popup._resultNode = this._result.root;
           var t = this;
           popup.popupShowingCallback = function() {t.chevronPopupShowing();};
-          this._chevron.appendChild(popup);
 
           this.updateChevron();
         ]]></body>
@@ -124,7 +146,7 @@
       <method name="getElementWidth">
         <parameter name="element"/>
         <body><![CDATA[
-          var style = document.defaultView.getComputedStyle(element, '');
+          var style = document.defaultView.getComputedStyle(element, "");
           var leftMargin = style.getPropertyValue("margin-left");
           leftMargin = leftMargin ? Math.round(parseFloat(leftMargin)) : 0;
           var rightMargin = style.getPropertyValue("margin-right");
@@ -147,11 +169,11 @@
           var totalWidth = this.boxObject.width;
           var spaceLeft = totalWidth;
           var overflowed = false;
-          for (var i = 0; i < this.childNodes.length - 1; i++) {
+          for (var i = 0; i < this.childNodes.length; i++) {
             var child = this.childNodes[i];
             child.collapsed = false;
             spaceLeft -= this.getElementWidth(child);
-            var spaceNeeded = (i == this.childNodes.length - 2) ? 0 : chevronWidth;
+            var spaceNeeded = (i == this.childNodes.length - 1) ? 0 : chevronWidth;
             if (spaceLeft < spaceNeeded) {
               overflowed = true;
               child.collapsed = true;
@@ -167,7 +189,7 @@
         <body><![CDATA[
           this._result = this._places.executeQueries(queries, queries.length,
                                                      options);
-	  this._result.root.containerOpen = true;
+          this._result.root.containerOpen = true;
           this._rebuild();
         ]]></body>
       </method>
@@ -208,6 +230,14 @@
         ]]></body>
       </method>
       
+      <method name="getDragableSelection">
+        <body><![CDATA[
+          if (PlacesController.nodeIsReadOnly(this._result.root))
+            return null;
+          return this.getSelectionNodes();
+        ]]></body>
+      </method>
+      
       <property name="selectedNode">
         <getter><![CDATA[ 
           return this.hasSelection ? this._selection : null;
@@ -238,7 +268,7 @@
               index = PlacesController.getIndexOfNode(this.selectedNode)
             }
           }
-          return new InsertionPoint(folderId, index);
+          return new InsertionPoint(folderId, index, 1);
         ]]></getter>
       </property>
       
@@ -326,47 +356,224 @@
         }
       })]]></field>
       <field name="_DNDObserver"><![CDATA[({
-        // XXXben ew.
+        // Inside the _DNDObserver object's functions, this points to 
+        // the _DNDObserver object.  _self points to the toolbar xbl object.
         _self: this,
+
+        // Menu buttons should be opened when the mouse drags over them, and closed
+        // when the mouse drags off.  The overFolder object manages opening and closing
+        // of folders when the mouse hovers.
+        _overFolder: {node: null, openTimer: null, hoverTime: 350, closeTimer: null},
+
+        // timer for turning of indicator bar, to get rid of flicker
+        _ibTimer: null, 
+        
+        _setTimer: function TBV_DO_setTimer(time) {
+          // There is a problem in Windows where timers don't fire while the
+          // mouse is dragging.  QI-ing the timer to nsITimerInternal and setting
+          // idle to false makes the timer fire.
+          var timer = Cc["@mozilla.org/timer;1"].createInstance(Ci.nsITimer);
+          timer.initWithCallback(this, time, timer.TYPE_ONE_SHOT);
+          timer.QueryInterface(Ci.nsITimerInternal);
+          timer.idle = false;
+          return timer;
+        },
+        
+        // Function to process all timer notifications.
+        notify: function TBV_DO_notify(timer) {
+        
+          // Timer to turn off indicator bar.
+          if (timer == this._ibTimer) {
+            ib = this._self._dropIndicatorBar.removeAttribute('dragging');
+            this._ibTimer = null;
+          }
+          
+          // Timer to open a menubutton that's being dragged over.
+          if (timer == this._overFolder.openTimer) {
+            // Set the autoopen attribute on the folder's menupopup so that
+            // the menu will automatically close when the mouse drags off of it.
+            this._overFolder.node.lastChild.setAttribute("autoopened", "true");
+            this._overFolder.node.open = true;
+            this._overFolder.openTimer = null;
+          }
+          
+          // Timer to close a menubutton that's been dragged off of.
+          if (timer == this._overFolder.closeTimer) {
+            // Only close the menubutton if the drag session isn't currently over
+            // it or one of its children.  (The autoopened attribute will let the menu
+            // know to close later if the menu is still being dragged over.)
+            var currentNode = PlacesControllerDragHelper.currentDropTarget;
+            var inHierarchy = false;
+            while (currentNode) {
+              if (currentNode == this._self) {
+                inHierarchy = true;
+                break;
+              }
+              currentNode = currentNode.parentNode;
+            }
+            // The _clearOverFolder() function will close the menu for _overFolder.node.
+            // So null it out if we don't want to close it.
+            if (inHierarchy)
+              this._overFolder.node = null;
+            
+            // Clear out the folder and all associated timers.
+            this._clearOverFolder();
+          }
+        },
+        
+        // The mouse is no longer dragging over the stored menubutton.
+        // Close the menubutton, clear out drag styles, and clear all
+        // timers for opening/closing it.
+        _clearOverFolder: function TBV_DO_clearOverFolder() {
+          if (this._overFolder.node && this._overFolder.node.lastChild) {
+            if (!this._overFolder.node.lastChild.hasAttribute("dragover")) {
+              this._overFolder.node.lastChild.hidePopupAndChildPopups();
+            }
+            this._overFolder.node.removeAttribute("dragover");
+            this._overFolder.node = null;
+          }
+          if (this._overFolder.openTimer) {
+            this._overFolder.openTimer.cancel();
+            this._overFolder.openTimer = null;
+          }
+          if (this._overFolder.closeTimer) {
+            this._overFolder.closeTimer.cancel();
+            this._overFolder.closeTimer = null;
+          }
+        },
+        
+        // This function returns information about where to drop when
+        // dragging over this menu--insertion point, child index to drop
+        // before, and folder to drop into.
+        _getDropPoint: function TBV_DO_getDropPoint(event) {
+          // Can't drop if the toolbar isn't a folder.
+          var result = this._self.getResult();
+          if (!PlacesController.nodeIsFolder(result.root))
+            return null;
+          asFolder(result.root);
+          
+          var dropPoint = { ip: null, beforeIndex: null, folderNode: null };
+          // Loop through all the nodes to see which one this should
+          // get dropped in/next to
+          for (var i = 0; i < this._self.childNodes.length; i++) {
+            var xulNode = this._self.childNodes[i];
+            if (PlacesController.nodeIsFolder(xulNode.node) &&
+                !PlacesController.nodeIsReadOnly(xulNode.node)) {
+              ASSERT(xulNode.getAttribute("type") == "menu");
+              // This is a folder. If the mouse is in the left 25% of the
+              // node, drop to the left of the folder.  If it's in the middle
+              // 50%, drop into the folder.  If it's past that, drop to the right.
+              if (event.clientX < xulNode.boxObject.x + (xulNode.boxObject.width * 0.25)) {
+                // Drop to the left of this folder.
+                dropPoint.ip = new InsertionPoint(result.root.folderId, i, -1);
+                dropPoint.beforeIndex = i;
+                return dropPoint;
+              }
+              else if (event.clientX < xulNode.boxObject.x + (xulNode.boxObject.width * 0.75)) {
+                // Drop inside this folder.
+                dropPoint.ip = new InsertionPoint(asFolder(xulNode.node).folderId, -1, 1);
+                dropPoint.beforeIndex = i;
+                dropPoint.folderNode = xulNode;
+                return dropPoint;
+              }
+            } else{
+              // This is a non-folder node. If the mouse is left of the middle,
+              // drop to the left of the folder.  If it's right, drop to the right.
+              if (event.clientX < xulNode.boxObject.x + (xulNode.boxObject.width / 2)) {
+                // Drop to the left of this bookmark.
+                dropPoint.ip = new InsertionPoint(result.root.folderId, i, -1);
+                dropPoint.beforeIndex = i;
+                return dropPoint;
+              }
+            }
+          }
+          // Should drop to the right of the last node.
+          dropPoint.ip = new InsertionPoint(result.root.folderId, -1, 1);
+          dropPoint.beforeIndex = -1;
+          return dropPoint;
+        },
+        
         onDragStart: function TBV_DO_onDragStart(event, xferData, dragAction) {
-          xferData.data = PlacesController.getTransferData();
-          // XXXben - the drag wrapper should do this automatically. 
-          if (event.ctrlKey)
+          PlacesController.activeView = this._self;
+          if (event.ctrlKey) {
             dragAction.action = Ci.nsIDragService.DRAGDROP_ACTION_COPY;
+          }
+          xferData.data = PlacesController.getTransferData(dragAction.action);
         },
         
         canDrop: function TBV_DO_canDrop(event, session) {
           return PlacesControllerDragHelper.canDrop(this._self, -1);
         },
+        
         onDragOver: function TBV_DO_onDragOver(event, flavor, session) {
-        },
-        onDrop: function TBV_DO_onDrop(event, dropData, session) {
-          var result = this._self.getResult();
-          if (!PlacesController.nodeIsFolder(result.root))
-            return;
-          result.root.QueryInterface(Ci.nsINavHistoryFolderResultNode);
-          var destContainer = result.root.QueryInterface(Ci.nsINavHistoryFolderResultNode).folderId;
-          var destIndex = -1;
-          var orientation = 1;
-          if (event.target.localName == "toolbarbutton") {
-            if (PlacesController.nodeIsFolder(event.target.node)) {
-              event.target.node.QueryInterface(Ci.nsINavHistoryFolderResultNode);
-              destContainer = event.target.node.folderId;
-              destIndex = -1;
-              orientation = 0;
-            }
-            else {
-              destIndex = PlacesController.getIndexOfNode(event.target.node);
-              var bo = event.target.boxObject;
-              orientation = (event.screenX < bo.screenX + (bo.width / 2)) ? -1 : 1;
-              if (orientation == 1)
-                ++destIndex;
-            }
+          PlacesControllerDragHelper.currentDropTarget = event.target;
+          var dropPoint = this._getDropPoint(event);
+          var ib = this._self._dropIndicatorBar;
+          if (this._ibTimer) {
+            this._ibTimer.cancel();
+            this._ibTimer = null;
+          }
+          if (dropPoint.folderNode) {
+            // Dropping over a menubutton, set styles and timer to open folder.
+            if (this._overFolder.node != dropPoint.folderNode) {
+              this._clearOverFolder();
+              this._overFolder.node = dropPoint.folderNode;
+              this._overFolder.openTimer = this._setTimer(this._overFolder.hoverTime);
+            }
+            if (!this._overFolder.node.hasAttribute("dragover"))
+              this._overFolder.node.setAttribute("dragover", "true");
+
+            ib.removeAttribute("dragging");
+          }
+          else {
+            // Dragging over a normal toolbarbutton,
+            // show indicator bar and move it to the appropriate drop point.
+            if (!ib.hasAttribute("dragging"))
+              ib.setAttribute("dragging", "true");
+            var ind = ib.firstChild;
+            var direction = document.defaultView.getComputedStyle(this._self.parentNode, "").direction;
+            if (direction == "ltr") {
+              if (dropPoint.beforeIndex == -1)
+                ind.style.marginLeft = this._self.lastChild.boxObject.x + 
+                                       this._self.lastChild.boxObject.width - this._self.boxObject.x - 7 + 'px';
+              else
+                ind.style.marginLeft = this._self.childNodes[dropPoint.beforeIndex].boxObject.x -
+                                       this._self.boxObject.x - 7 + 'px';
+            } else {
+              if (dropPoint.beforeIndex == -1)
+                ind.style.marginRight = '0px';
+              else
+                ind.style.marginRight = (this._self.childNodes[this._self.childNodes.length - 1].boxObject.x +
+                                         this._self.childNodes[this._self.childNodes.length - 1].boxObject.width) -
+                                        (this._self.childNodes[dropPoint.beforeIndex].boxObject.x) - 5 + 'px';
+            }
+            // Clear out old folder information
+            this._clearOverFolder();
           }
-          var ip = new InsertionPoint(destContainer, destIndex);
-          PlacesControllerDragHelper.onDrop(null, this._self,
-                                            ip, orientation);
         },
+        
+        onDrop: function TBV_DO_onDrop(event, dropData, session) {
+          var dropPoint = this._getDropPoint(event);
+          if (dropPoint == null)
+            return;
+          PlacesController.activeView = this._self;
+          PlacesControllerDragHelper.onDrop(null, this._self,
+                                            dropPoint.ip, 1);
+        },
+        
+        onDragExit: function TBV_DO_onDragExit(event, session) {
+          // Set timer to turn off indicator bar (if we turn it off
+          // here, dragenter might be called immediately after, creating
+          // flicker.)
+          if (this._ibTimer)
+            this._ibTimer.cancel();
+          this._ibTimer = this._setTimer(10);
+          // Close any folder being hovered over
+          if (this._overFolder.node)
+            this._overFolder.closeTimer = this._setTimer(this._overFolder.hoverTime);
+          PlacesControllerDragHelper.currentDropTarget = null;
+        },
+        
         getSupportedFlavours: function TBV_DO_getSupportedFlavours() {
           var flavorSet = new FlavourSet();
           for (var i = 0; i < this._self.supportedDropTypes.length; ++i)
@@ -375,6 +582,30 @@
         },
         
       })]]></field>
+      
+      <method name="checkForMenuEvent">
+        <parameter name="event"/>
+        <parameter name="action"/>
+        <body><![CDATA[
+          // It seems that even if the menu drag/drop event
+          // handlers set their phase to capturing, toolbarbutton
+          // menu events come to the toolbar first, and don't bubble.
+          // So if this is a menu/menuitem, try to send the event to its
+          // xbl handler.
+          if (event.target.localName.indexOf("menu") == 0) {
+            var parent = event.target.parentNode;
+            // XULDocument has no getAttribute() function, so check for it before calling.
+            while (parent && parent.getAttribute) {
+              if (parent.getAttribute("type") == "places") {
+                nsDragAndDrop[action](event, parent._DNDObserver);
+                return true;
+              }
+              parent = parent.parentNode;
+            }
+          }
+          return false;
+        ]]></body>
+      </method>
 
       <method name="saveSelection">
         <parameter name="mode"/>
@@ -401,29 +632,34 @@
         PlacesController.mouseLoadURI(event);
       </handler>
       <handler event="draggesture"><![CDATA[
-        // XXXben ew.
         if (event.target.localName == "toolbarbutton" && 
             !event.target.hasAttribute("type"))
           nsDragAndDrop.startDrag(event, this._DNDObserver);
       ]]></handler>
       <handler event="dragover"><![CDATA[
-        // XXXben ew.
-        nsDragAndDrop.dragOver(event, this._DNDObserver);
+        if (!this.checkForMenuEvent(event, "dragOver"))
+          nsDragAndDrop.dragOver(event, this._DNDObserver);
       ]]></handler>
       <handler event="dragdrop"><![CDATA[
-        // XXXben ew.
-        nsDragAndDrop.drop(event, this._DNDObserver);
+        if (!this.checkForMenuEvent(event, "drop"))
+          nsDragAndDrop.drop(event, this._DNDObserver);
+      ]]></handler>
+      <handler event="dragexit"><![CDATA[
+        if (!this.checkForMenuEvent(event, "dragExit"))
+          nsDragAndDrop.dragExit(event, this._DNDObserver);
       ]]></handler>
       <handler event="popupshowing"><![CDATA[
-        if (event.target.parentNode.localName == "toolbarbutton")
+        if (event.target.parentNode.localName == "toolbarbutton" &&
+            !PlacesControllerDragHelper.getSession())
           this._openedMenuButton = event.target.parentNode;
       ]]></handler>
       <handler event="popuphidden"><![CDATA[
-        if (event.target.parentNode.localName == "toolbarbutton")
+        if (event.target.parentNode.localName == "toolbarbutton" &&
+            !PlacesControllerDragHelper.getSession())
           this._openedMenuButton = null;
       ]]></handler>
       <handler event="mousemove"><![CDATA[
-        if (this._openedMenuButton == null)
+        if (this._openedMenuButton == null || PlacesControllerDragHelper.getSession())
           return;
       
         var target = event.target;
diff --git a/browser/components/places/content/tree.xml b/browser/components/places/content/tree.xml
index 992e68b3d6e6..22411217d467 100644
--- a/browser/components/places/content/tree.xml
+++ b/browser/components/places/content/tree.xml
@@ -274,6 +274,16 @@
           return this.getSelectionNodes();
         ]]></body>
       </method>
+      <method name="getDragableSelection">
+        <body><![CDATA[
+          var nodes = this.getSelectionNodes();
+          for (var i = nodes.length - 1; i >= 0; i--) {
+            if (PlacesController.nodeIsReadOnly(nodes[i].parent))
+              nodes.splice(i, 1);
+          }
+          return nodes;
+        ]]></body>
+      </method>
       
       <!-- AVI Method -->
       <property name="selectedNode">
@@ -438,11 +448,11 @@
             }
           }
           
-          // Stuff the encoded selection into the transferable data object
-          xferData.data = PlacesController.getTransferData();
           // XXXben - the drag wrapper should do this automatically. 
           if (event.ctrlKey)
             dragAction.action = Ci.nsIDragService.DRAGDROP_ACTION_COPY;
+          // Stuff the encoded selection into the transferable data object
+          xferData.data = PlacesController.getTransferData(dragAction.action);
         ]]></body>
       </method>
       
diff --git a/browser/components/places/jar.mn b/browser/components/places/jar.mn
index 7bdc16e6488c..ff62c9b926de 100755
--- a/browser/components/places/jar.mn
+++ b/browser/components/places/jar.mn
@@ -21,6 +21,8 @@ classic.jar:
     skin/classic/browser/places/bookmarks_toolbar.png    (skin-win/bookmarks_toolbar.png)
     skin/classic/browser/places/livemark_item.png        (skin-win/livemark_item.png)
     skin/classic/browser/places/places-icon.png          (skin-win/places-icon.png)
+    skin/classic/browser/places/toolbar_dropmarker.png   (skin-win/toolbar_dropmarker.png)
+    skin/classic/browser/places/folder_drag_over.png     (skin-win/folder_drag_over.png)
     skin/classic/browser/places/bookmarkProperties.css   (skin-win/bookmarkProperties.css)
 
 en-US.jar:
diff --git a/browser/components/places/skin-win/folder_drag_over.png b/browser/components/places/skin-win/folder_drag_over.png
new file mode 100755
index 000000000000..740dabf01517
Binary files /dev/null and b/browser/components/places/skin-win/folder_drag_over.png differ
diff --git a/browser/components/places/skin-win/places.css b/browser/components/places/skin-win/places.css
index d714be19f9f2..948b0a85536c 100755
--- a/browser/components/places/skin-win/places.css
+++ b/browser/components/places/skin-win/places.css
@@ -232,3 +232,45 @@ treechildren::-moz-tree-cell-text(title, separator, selected, focus) {
 .no-margin-button {
   min-width:0em;
 }
+
+/* Personal toolbar */
+.toolbar-drop-indicator {
+  height: 16px;
+  width: 5px;
+  margin-bottom: -8px;
+  position: relative;
+  background: url('chrome://browser/skin/places/toolbar_dropmarker.png') 50% 50% no-repeat;
+}
+
+.toolbar-drop-indicator-bar {
+  display: none;
+  height: 16px;
+  margin-bottom: -16px;
+  margin-left: 4px;
+  position: relative;
+}
+
+.toolbar-drop-indicator-bar[dragging="true"] {
+  display: -moz-box;
+}
+
+toolbarbutton.bookmark-item[dragover="true"][open="true"] {
+  -moz-appearance: none;
+  background: Highlight !important;
+  color: HighlightText !important;
+  list-style-image: url('chrome://browser/skin/places/folder_drag_over.png') !important;
+  -moz-image-region: rect(0px, 16px, 16px, 0px) !important;
+}
+
+.bookmark-item[dragover-into="true"] {
+  background: Highlight !important;
+  color: HighlightText !important;
+}
+
+.bookmark-item[dragover-top="true"] {
+  -moz-border-top-colors: #000000;
+}
+
+.bookmark-item[dragover-bottom="true"] {
+  -moz-border-bottom-colors: #000000;
+}
diff --git a/browser/components/places/skin-win/toolbar_dropmarker.png b/browser/components/places/skin-win/toolbar_dropmarker.png
new file mode 100755
index 000000000000..c59c05ae4868
Binary files /dev/null and b/browser/components/places/skin-win/toolbar_dropmarker.png differ