I've confirmed the following with the support team: There is currently no way to set the starting folder when opening the LibraryBrowserDialog via python. I can set the SelectedItem property, but if I set this to a folder in the library, that folder appears as the selected Item and if you press ok, you are inside the folder. However, it would be nicer to be inside the folder when the dialog is opened without doing anything.
So my enhancement request is to add an option to the LibraryBrowserDialog which sets the starting folder.