My enhanced version of Kichik's NiceCategoryList extension is now up on mw.org:
http://www.mediawiki.org/wiki/Extension:NiceCategoryList2
This extension displays a category listing, including sub-categories, in a number of useful formats. This is intended to allow easier navigation of a wiki's category tree. It implements a new tag, <ncl>, which generates a list of all pages and sub-categories in a given category. The list can display multiple levels of sub-categories, and has several options for the display style.
Ian