I really love the new LRT4 and the visual deflicker.

But, as the visual deflicker takes its time - would it improve if it was possible to place these folders in a user selectable folder? The reason for asking is that all my timelapse photos are on an external usb drive, and I would expect a lot better read/write times if the .lrt folders were placed at the internal (SSD) drive (or is it simply a cpu/gpu constraint)?

Having the previews next to the image data is a new feature in LRT4 that has a lot of advantages. In all my tests I didn't find the drive used to store the small previews is the bottleneck. But of course, you could just move the whole folder with the sequences you are working on to the ssd and later on, when you are finished just move them back to another location.
Just make your own tests, if the location really matters in terms of speed.