Thanks for the hint.
I've experimented more than a couple of things and found the following settings works for me, at least it's much better than broken.
Under 'Budles' => 'Edit' => 'Settings' => 'Indenting':
{ disableIndentCorrections = :true; indentOnPaste = 'simple'; foldingStartMarker = '^\s*"""(?=.)(?!.*""")'; foldingIndentedBlockStart = '^\s*.*(:|-) ?(&\w+)?({[^}"'']*|([^)"'']*)?$'; foldingIndentedBlockIgnore = '^\s*#'; }
foldingStartMarker was copied from Python setting. foldingIndentedBlockIgnore was copied from the 'Fold on the Dotted Line' section in http://blog.macromates.com/2012/the-layout-engine/