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We did a similar exercise last year and there was no fallout in terms of existing links because as you stated the project is not part of the URL. We believe project folders to be in existence for optimal organization of content and for controlling of permissions. What you may have to watch out for though is if you have any scripts that use tabcmd, then sometimes there will be a reference to --project within here.
Great, thanks Jeff. I don't believe we use tabcmd anywhere. And you are correct...for us, project folders allow us to control permissions (using Windows AD) and to help some of our server-only users to find the content they are looking for.