Well, there's a difference between an empty folder and a folder that's not accessible. I do not think this is a bug at all.
You are right if you have that "Ignore Empty Folders" in mind in the sense that ignoring empty folders doesn't mean ignoring inaccessible folders thus this is not a bug (that is related to the "Ignore Empty Folders" option).
But if we look at SmartFTP default behaviours:
1. What does it do with zero size files? What's the option "Ignore Zero Size Files" there for?
2. What does it do with empty folders? What's the option "Ignore Empty Folders" there for?
So, what should it do with inaccessible folders? Then should there be the option "Ignore Inaccessible Folders"?
IMHO this is a bug as SmartFTP fails to handle inaccessible folders. But feel free to move this to "Enhancement Requests" if you don't see this as a bug.