I would layout the path navigator like this:
[_ICON_] [artists] [Crazy Fool] [Greatest Hits]

Clicking on the icon would pop up a list (like the combo box):
| //////Greatest Hits
| /////Crazy Fool
| ////artists
| ///music
| //me
| /home
| /

That's a very good idea as it gets rid of those awkward tiny scroll arrows. One small remark: I would reverse the drop down list order to:

| /
| /home
| //me
| ///music
| ////artists
| /////Crazy Fool
| //////Greatest Hits

Your list has the items at the top that are already available as buttons. When the user clicks the drop down list she probably wants to select one of the top levels that are invisible. So it makes sense to put those at the top instead.