Two different category drop downs I've done:
www.extremepsi.com 3 tier category fly-out DHTML
www.kegworks.com 3 tier category php based (on refresh)
The kegworks code is in 3.4.x but is portable to 3.5.x with ease. Granted the php based kegworks category list isn't as fancy but it is alot more usuable and will work in the HTML catalog without any adjustments as well as cross browser compatible.
