Custom category navigation – "directory – like"

Job Description
We are setting up a wordpress site with a category structure such as this:

Category A
-> Subcategory B
-> subcategory C

We need a “directory” type navigation structure based on the categories.

For example the first page would show:
___________________________________________________________________
Category A

subcategory B subcategory B subcategory B
subcategory B subcategory B subcategory B
subcategory B subcategory B subcategory B
___________________________________________________________________
Selecting “Category B” would bring up this page:

___________________________________________________________________
Subcategory B

subcategory C subcategory C subcategory C
subcategory C subcategory C subcategory C
subcategory C subcategory C subcategory C
___________________________________________________________________

And finally, subcategory C would function like an original wordpress categories page:

___________________________________________________________________
Subcategory C

Subcategory C Post title 1
Post content.. read more

Subcategory C Post title 2
Post content.. read more
___________________________________________________________________

We have started to code this but it is not the easiest thing to accomplish.

Any ideas?

Thanks for your help in advance!