Yep..exactly. We use it frequently to create 'hidden' categories that we want to target as landing pages for AdWords campaigns or promotions and as Special Offers categories (using the disasterous Special Offers Add-on). Just note that the products will still show up in a search even though the category doesn't show up in the menu.
There is also a 'Hidden Categories' custom mod in the Custom Mod forums which uses a different approach to the problem.
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Padraic Ryan
Ryan Design Studio
Professional E-Commerce Development
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