The idea is to basically allow us to pin add-ons and extensions context menu actions to a sub-menu in the context menu itself, to avoid clutter from having too many context menu options.
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This is a wonderful idea!
I am waiting for an addon like this ever since the new Quantum Firefox made former Context-Menu-Style-Addons unusable.
So, yes, please ... Go ahead with this!!!
At the risk of making this too complex, it might be nice to have there be a settings option for whether to put addon context items into a submenu or not. And in that case, it would be even nicer to choose which addons go into the submenu (i.e. so you could have your most-used extension items in the main context menu list, while your less-used extension items are in a submenu).