I was having problems with the final results, but I recently found a solution that will at least get the results your looking for. So i figured i'd post this for people that have bulk categories to create and would much rather not do it manually.
If you are having problems with your subcategories displaying, simply Edit the parent, change the parent's parent setting to one of its subcategories, then save. Everything should display in the categories (The parent's parent setting you changed will actually remain at None).
Hope this helps.