First of all, a folded horn is just a regular horn but bent at sharp turns since it's used for bass and bass is fine with this. So think about it like that - it's a horn, and follows such laws. In my mind, if I think about the sound bouncing and reflecting at weird angles it just jumbles my mind, so I always picture a straight horn.
And the reason for the horn increasing the sensitivity is because the energy transfer between the cone of the driver and the medium(in this case, air) is improved by increasing the resistiveness of the air (or in other words, according to acoustics, making the air "thicker"). And since the cone is quite solid, it can deliver more energy than the air will fully transfer into open air; adding the horn concentrates the energy transfer.
The length of the horn determines the extension of the horn because since sound waves basically repeat every cycle, the horn must be long enough for the wave to repeat (IIRC 1/4 of the wavelength is the cut off point) or it will not work. So it not really that it reflects as in the sense of wall loading, but the whole wave is contained within the horn.
And keeping in mind that folded horns are simply horns, ask him why compression drivers are not left with their 1" output into open air. But then again, those horn are short because the wavelenght is much shorter than bass frequencies. And better yet, if horn are so useless, why in the world do marching band make tuba player carry around that 50 pound monster when (according to your friend) they would only to blow raspberries with their lips
That's as best as I can explain it, but hopefully some of the others with more knowledge on this will chime in add more or correct anything I have not gotten right.
Built:6 t39, t18, 4 Jack10, 2 autotuba, 2 SLA,2 wedge, 2 TT, 2 Tritrix, curved sla, 2 otop212, 2 SLA pros, Ported 8" sub, 2 ported 210, dual ported 8" sub