When you add a library, image or sound to your game through the GUI, Quest will make a copy of it in your game folder if it is not already there. However, you can access files in other folders in code, just by giving the path.
picture("../images/death.png")
The problem with that is when you come to publish your game, Quest only bundles images and sounds in your game folder, so while it works fine in the editor, it will not work when you publish (I think library files will be fine, because in that case Quest adds the specific ones listed, and will go find them if elsewhere).
So yes, it would be neater, but don't do it.