I think you’re right, @MitchWagner. I bet it’s just been so long since I used the External Folders feature that I didn’t remember. Never mind my previous comment; unfortunately, it does appear — especially based on a re-reading of the email I received — that the feature touted for U 18 is, indeed, Dropdown-specific. Mind you, that will probably suffice if one has a Dropbox account, but I gave mine up recently so guess I’ll have to decide whether to get another one just to test this feature.
I still haven’t heard back from Ulysses developers on my query. Not unreasonable – it’s the weekend
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Double-click the top-level External Folder in the sidebar, and uncheck “Read and write markdown files.”
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Yes, that works. Thanks!
And I see that the document created has a .ulyz extension. But it’s just a ZIP file with a folder, and, inside the folder, an XML document and, if you attach an image, the image.
Very nice!
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I should’ve kept reading this thread. I could’ve saved a question to beta@ulysses.app. 
That said, yes, this is the way it works. I’ve tried it on Dropbox, iCloud Drive, and just plain old non-cloud, totally local storage. All, good. Goals, notes, keywords, image attachments — all good to go, it would seem, as long as one is happy with the .ulyz files/psuedofiles (sounds very Scrivener-ish, with the .ZIP-posing-as-a-file thingie going on). Looks as if iA Writer will still be my native-.md editor, though, but that’s okay. This is a good thing.
According to some recent tweets, Dropbox, iCloud Drive, and ordinary local storage are working well in the beta.
I’ve been using it with local storage, backed up to iCloud. It’s solid. The whole beta is solid. IMHO - it’s still beta.
It’s good, yes, but not good enough for me. I no longer want my writing to be held hostage by closed formats. I had such a terrible time moving my journal entries out of Day One that I vowed to never subscribe to another app unless it was open enough to keep my files in my file system and in formats that are open and can be used by other apps. If Ulysses were to support MultiMarkdown in External Folders, and learn to use iCloud Drive like how 1Writer does, i.e., allowing me to keep my folders in the app, then I’ll consider subscribing again. But for now, those items, along with a private roadmap that ensures I’ll never know if they’re working on what I need from the app, will keep me from renewing my subscription. Shame as it’s my favorite writing environment otherwise.
I’m quite happy with the nvUltra beta for now. It’s not meant to be a replacement for Ulysses, but it meets my needs, and I’ve stopped using Ulysses in favor of it.
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Good points. I am keeping it but that is because anything I want to keep permanently usually ends up in LaTeX, mail or I just simply save it in plain text and moved out of Ulysses anyway. I do need to be more systematic in my ‘spring cleans’ regarding that. But it gives me a chance to delete and de clutter as I do it.
However I take the main point you make and it is a consideration or should be. I have a similar problem with DEVONthink and I am now getting concerned as to what happens if it was to disappear. My permanent stuff is all supposed to be in plain text. Either LaTeX or just straight plain text files.
Since iA Writer isn’t updated for iPadOS yet and the better Dropbox support may fix one of my issues with Ulysses, I may give it another try.
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The iA Writer 5.3 beta in TestFlight has support for iOS 13 and iPadOS. You can write support@ia.net to ask to be added to the beta test. I haven’t run into any bugs yet in my admittedly limited testing.
iA Writer 5.3 Beta 1
iPad
- Multiple windows can be created by dragging iA Writer icon from Dock or from contextual menu in Library and Quick Search
- File names are shown in App Switcher
iOS
- Context menus in Library and Quick Search
- Full page screenshots on iOS 13
- Editor screeshot produces a plain text PDF
- Preview screenshot produces a formatted PDF
- Launch screen adapts to Dark Mode on iOS 13
- System appearance setting on iOS 13
- Library supports selection gestures on iOS 13 (slide two fingers, or slide one finger over checkboxes when in editing mode)
- Fixed issues setting dark app icon on iOS 13
- Smaller sidebar in split screen
- Disabled sidebar with accessibility large text sizes
- Improved paste method implementation in an attempt to resolve an issue where sometimes paste stops working until relaunch
iOS and macOS
- Handoff now works when both devices have a Library Location with the same name
- Files are handed off using Library paths:
/Locations/GitHub/Readme.md- Requires iA Writer 5.3 on both devices
- Relative path Content Blocks:
../Note.txtwill include a note from the parent folder- Links to local images are now converted as file URLs
- Improved performance of PDF export when header or footer don’t contain page numbers
- Fixed an issue where Markdown or HTML local image paths with query items did not work
- Fixed link import from Word
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Where’d you end up settling with IA and Ulysses?