You can do this sort of thing… http://www.sitepoint.com/contact
Check out the Reason for Contact drop down - it’s not exactly what you asked for though.
It doesn’t primarily have to do with validity.
Markup inside an OPTION element should be rendered literally. In your example, the displayed text should be ‘<strong>Public:</strong>folder 1’.
If you want to use the standard form elements, I think so.(but its likely im wrong, Tommy ?)
You could always do what Google does and recreate the form elements using your own customized elements, but thats not very semantic now is it?