SpinyMan,
Thank you so much! You are a life saver. Based on that, I was FINALLY able to create the "always display all categories and all their subcategories" layout I was so searching for!
Code:
Main Cat A
subcat 1
subcat 2
subcat 3
Main Cat B
Main Cat C
subcat 1
subcat 2
subcat 3
My categories.tpl, based on yours, is attached for others.