This thread was very helpeful to me because I need same thing on my website and I achieved it thanks to Glenns code bellow 
Code:
// subcat limit 2007-12-20
if (substr_count($box_categories_array[$i]['path'],'_') = 0 or zen_get_product_types_to_category($box_categories_array[$i]['path']) == 3 or ($box_categories_array[$i]['top'] != 'true' and SHOW_CATEGORIES_SUBCATEGORIES_ALWAYS != 1)) {
// skip if this is for the document box (==3)
} else {
but in my case I dont need subcategories to show any further subcategories. To explain what I want to achieve here's the example:
-----------------------------------------------
THIS IS HOW IT LOOKS LIKE NOW:
-----------------------------------------------
MAZDA (1st subcategorie level)
- mx (2nd subcategorie level)
-- 2005 year (3rd subcategorie level)
-- 2006 year
-- 2007 year
- cx
- rx
MERCEDES
- c
- e
- s
MITSUBISHI
- lancer
- pajero
- l200
-----------------------------------------------
THIS IS HOW I NEED IT:
-----------------------------------------------
MAZDA (1st subcategorie level)
MERCEDES
MITSUBISHI
Any help is wellcome, thanks!
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