Here is how I see it as high-level...
User clicks on "add a category" on the WP admin UI. in addition to the current stuff, he now gets a "category template" drop down - where he can define the category template plus a checkbox to help-manage cascading.
Sample Category Template DropDown Contents
As to the checkbox..
The new UI should also have a check box labeled as "apply this template to sub categories" and that checkbox should be checked by default!
You guys can figure it out as to how to populate that drop down, and what conventions to use in cat templates to show up in that drop down but that's beside the main point I want to address here.
I am very big about that checkbox for "apply this to sub categories" thing. It's all about convenience.
Imagine where you have to deal with a situation, where an entire top level category tree has to share some common layout/style settings downward.
With this feature, you not only could assign what template that top level cat to use but also (thanks to that checkbox), could enforce all the sub cats to default to that top level template. And this will cause you to literally "do nothing" for all the sub and sub-sub cats to follow/cascade downward.
Say, you assign the category-red for the top level category titled as " CATEGORY RED". As you create sub and sub-sub cats for that top level, you basically do "nothing" about managing the sub categories' templates. Everything down from the top level "RED", will end up using the category-red layout!. And when you change that to say, category-dark-red, the entire sub tree involved will switch to category-dark-red in one setting. How wonderful is that!
Ofcourse, this idea is not to take care of just the styles, colors etc... This color based example was only to make it easier to explain as to what cascading power can do here!
If you guys are interested, we can take this core idea to the next level and iron out the issues!