I posted that there is a bug in drop_down_cats, which there isn't. The problem is in drop_down_categories, which uses get_nested_categories.
It only works if the child categories were created after the parent categories. If you want to put your categories under a new top-level category, it doesn't work, ie. not all categories are displayed.
This can be easily demonstrated as follows.
create cat0, parent none
create cat1, parent none
create cat2, parent none
edit cat1 and make cat2 its parent
edit cat0 and make cat1 its parent
now go into write or edit post, and you won't see cat0.
Is this a known bug, and is there a fix ?