Just to note that I have Editorial set to sync my entire Dropbox account (i.e. the sync folder is '/'). It syncs over 700 .md and .txt files fine. I've found Editorial to be very robust in this way, and never had conflicts, unless I really was editing a Dropbox file in both Editorial and on a PC.

One really neat thing I've found is that when you open a file in Editorial, it loads and seems to do a quick background check to see if the local copy of the file is out-of-date. If so, it gets-and-loads the latest version, and displays a little message that the file was updated. This works really well. My experience of many other iPad Dropbox Markdown editors is that this would cause a conflict.