You can see an example of the mod discussed here on:
http://www.purpleturtlekids.com
It's an old site I did a long time ago (2 years?) that I have revisited and made the look a bit fresher (within their budget).
If you click on the category tabs you will notice when you get to the end of a category tree branch (where there's no more subcategories) it will still show the previous set of subcategories in the purple bar.
Carrie