Scenario. I tried to edit the default category and rename it after I had made first post to newly setup wp 2.0 installation. The edit on the category succeded and even showed up in the editor as well as on the post. However refreshing the main page of the blog (not the admin console) caused the category to regress to Uncateorized.
So, I decided to add a new category, change it to the default and then delete the original "Uncategorized" category. The admin console hangs with a "processing data..." message in this event. I am unable to delete this category.