Time Machine backups do not replace
the entire folder.
The general idea of a backup is to replace stuff that you lost/deleted/fed to the cat/etc. and not to clean up your over populated folders.
If there is a file with the same name as the one being restored, then the older version will be overwritten.
Nothing will happen to any other files in the folder.
Imagine the problems if you wanted to restore just one file and it wiped out all the other files in that folder!
One way of doing what you want is to move the folder with the duplicates to another location.
Then do a restore of the TIme Machine version.
You would(should) end up with the non-duplicate folder in the same place as the duplicate containing folder originally was, before you moved it.
You would need plenty of HD space to accomplish the move though.