Sure, you can place the Applications folder in the Dock, but it's easier to use Overflow (US$14.95) from Stunt Software because, with it, you view only what you want, not everything in the Applications folder.
The Mac app (for OS X 10.5 and later) offers a nicely arranged palette that can be resized. In Overflow -- now up to version 2.5.9 -- categories allow the software to hold as many items as you want. The full keyboard control, including a hot key to bring up the main window, adds the ability to use the application entirely without the mouse. A dock menu gives access to any items stored in Overflow directly from the dock.
Items can be added to the Overflow palette by either adding via the editing function, or dragging and dropping to the Overflow icon on the Dock or to the palette. To use the program, you simply click on its Dock icon, and click on the app, doc or folder icon you wish. Overflow disappears when the item opens or when you click on another part of the screen.
The ability to sort by type would be nice. This would let you group folders, applications and documents.