What id like to know is if its possible to break out of the normal categories list by having in essence a top level of categories and then within these are subcategories.

The main and significant difference to the existing structure is that these top level categories exist as another menu/list somewhere else on the page so for example:

existing categories layout
------------------------------

Mens
----footwear
----jumpers
----hoodys
----pants

Womens
----footwear
----jumpers
----hoodys
----pants

Kids
----hoodys
----footwear
----toys

So the top categories (Mens, Womens, Kids) are used in another menu and when selected the existing categories box shows only the child categories.

Hope it makes sense.