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Re:Tab Candy: Mozilla Labs is making Firefox tabs sweet by lkozma on Friday July 23, 2010 @05:59PM (#1542533)
The fisheyetabs extension has similar goals, at least for avoiding scrolling and making tabs easier to locate (no grouping though). The implementation might not be flawless, but I'd like to think that the concept is sound.

https://addons.mozilla.org/en-US/firefox/addon/4845/ Disclaimer: I'm the author of f.e.t.

Re:Tab Candy: Mozilla Labs is making Firefox tabs sweet by Frump on Friday July 23, 2010 @11:05PM (#1542997)
It's not compatible with Firefox 3.6.7. Will you be updating it?
Re:Tab Candy: Mozilla Labs is making Firefox tabs sweet by lkozma on Saturday July 24, 2010 @08:08AM (#1543516)
Should work now, I updated it 1.5 - 4.0b3pre, I haven't tested it yet though, as I have 3.5.9.