A release version of this plugin is now available from the Fold Category List support page.
This is a feature upgrade introducing changes that focus on better handling of how empty categories get displayed, based upon whether they, or their children have any posts attached.
In implementing this an ability to tally the total number of posts attached to a category, or any of its sub-categories was introduced, and an option to display this cumulative total also introduced. As well as the support page linked above, a more complete description of the changes to Fold Category List is also available.
The plugin remains compatible with WP 2.1