The only working method I know of would be to hack shell32.dll using ResourceHacker. What you want to get rid of is the 96x96 pixel version of the folder icon.
First you need a replacement icon. In an icon editor like Axialis Icon Workshop open the folder icon inside shell32.dll and make the 96x96 formats all transparent. Save the modified icon to a folder. (If you don't have a suitable program to edit icons I can attach an icon in a follow up post.)
Open shell32.dll in ResourceHacker replace IconGroup 4 with your new icon and click "save as" (not "save").
Last step replace shell32.dll with the modified version. Easiest way using Replacer . It will deal with Windows File Protection and automatically create a backup of the original file.