Try the add-on called Smart Bookmarks Bar. It not only reduces the bookmarks into just icons, but also shows the names when mouse-overed. It looks something like this:
[caption id="" align="aligncenter" width="300" caption="Ignore the fact that the pointer is not visible in the snap. It should be on the YouTube bookmark."]
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So, download it and try it for yourself. It also has an option to auto-hide the Bookmarks Bar, but I had a little problem with folders and Live Bookmarks, when opening them in a new tab.
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