How can I customize News Item content type to behave like a folder (accept files, folders as children)?
/portal_types/News%20Item/manage_propertiesForm
Changing Allowed content types seems to have no effect.
Try searching for collective.folderishtypes, that provides "Folderish News Item". Then look for 'folderish' at http://docs.plone.org for further reading. At this moment, using Dexterity to customize content types is better for future upgrades.