Hi MythNReality,
I've posted a similar mod located here
http://forum.x-cart.com/showthread.php?t=34914 that deals with sub-categories in the category menu. See post #4 for instructions and post #7 for a thumbnail of how it looks like.
It was created for v4.1.8 but I think it might work for v4.1.9. Just make sure you make backups of your original files.
- MoonDog -