Not sure if this would be a Hack or a Feature Request, but I came across one of the best (in my opinion) ways to organizing categories and links...Not sure what tool the guy is using, but here's how it seems to work:
Under "Menu", he's got nested lists (ex: Design -> Graphics, Development -> Database -> MySQL, etc.) There's no differentiation between links and post categories. When you click on one, you get first a list of all local blog posts of that category (if any), next you get a list of links with desctiptions (if available.)
Ok, it's better to see for yourself than have my try to explain it...
Here's the home page of the weblog:
Here's a category link:
Pretty cool, eh?
I'm hoping someone infinitely smarter than me could come up with something like this for WP...