I'd also prefer one copy/folder.

For BC/1.10o detection I'd see three solutions:
1) Probably the nicest way is to try to derive the file type from the only true difference: event usage. Many events simply don't exist in BC, so the easiest guess would be: assume BC, unless non-BC events are used. Maybe it's also possible to look at event parameters. It's probably not very difficult to come with a pretty good algorithm. The only caveat would be that work-in-progress-levels with little events set could be misclassified.
2) Another way would be to place a simple, empty file inside (for example) the BC folder, named "BC" or something like that. If the level file is in the same folder as the "BC" file, it's a BC level, otherwise it's an 1.10o level. If you store BC levels in a seperate folder, just create a "BC" file in that folder for MLLE to work correctly. This would make it difficult to store levels from both games in the same folder though. If MLLE is going to store seperate settings in .ini files inside game folders, it could also look for the ini file.
3) Unless it's possible to detect the correct game 100% accurate, a BC/1.10o toggle button is pretty much unavoidable.