When doing a firmware upgrade it removes any files which has been modified or added, for example third party applet lua files, but it leaves the empty directories, for example directories for third party applets.

I think the firmware upgrade should also remove the empty directories.

The problem is in /linuxrc which contains the rm directive that removes the files.

It will probably not cause any major problem unless there is some applet that reads the file system and checks if a directory exists. The current version of the third party "Patch Installer" applet does this which results in problems. It shouldn't be a problem to change the "Patch Installer" applet to handle this but it feels like the correct solution would be to also reset the directories after a firmware upgrade and not just the files within them.