I'm not a scenery/mesh expert but Frank Betts is . . .
You are correct, the mesh should be installed before the scenery for a given area (if in separate folders).
As you know, FS9 uses a hieriarchy of folders to find *.bgl files which is:
1.)
C:\Program Files\Microsoft Games\Flight Simulator 9\ADDON SCENERY\NEWFOLDER
2.)
C:\Program Files\Microsoft Games\Flight Simulator 9\SCENERY\ (i.e., trees_0.bgl)
3.)
C:\Program Files\Microsoft Games\Flight Simulator 9\SCENERY\WORLD\SCENERY\
This is (probably) why Frank just puts everything (including AI traffic) into the one NEWFOLDER in the number-one (#1) option above.
The only (potential) problem arises when FS9 finds duplicate files; if there are no duplicates, it makes no difference where *.bgl files are placed as FS9 will find them in any of the above listed heirarchy of files (#1, #2 and last, #3).
Hope this answered your question. (. . . hope someone has better explanation :-) I (S)earched this forum for past 60 days and did not find any definitive answers.