I followed the trick of putting /. into the category base field under permalinks in options. Then it worked but sub-categories linked to 404 pages.
I changed it to /cat
And now sub-categories work for blogurl/cat/catname/subcatname
But the really weird thing is the top-level category works under that structure but it STILL works for blogurl/catname
It works fine for me I guess, but that's weird, and it would be nice to fix the first issue.