Hi hiphutch!
The reasoning behind MusicCabinet is to take an initial hit to allow for faster generation of playlists later on. Subsonic doesn't read meta-data of files during the scan (which makes the scanning fast and generation of random playlists quite slow). MusicCabinet reads meta-data for new files (and then caches it), so it'll read through your 300.000 files the first time you use it. It's gonna take a while. Actually, you'll have to run the search index a couple of times to get meta-data for all your artists, there's an upper limit of 4000 artists or so per update to not bail out completely.
For browsing, I've currently made it so that I assume that root folders in your Media folders represent artists.
For your setup, it'll therefore think that you only have artists called A, B, C etc and that they all have enormous amounts of albums. Not quite right. To fix this, go to Settings -> Media folders, remove "music" and instead add A, B, C etc as separate Media folders.
It'll mean 20.000+ artists in your left folder though.

Currently, that's how it is. It would be possible to add some folder handling there, but it's nothing I've planned for atm.
Let me know how it behaves after you've done the Media folder change and the search index procedure has finished!
Regards