I like very much your work - it's simple, fast and easy to use ! But here's a similar wish to add subcategories to main categories. For example: Year 2010 -> January -> Album1, album2, album3,...etc. Maybe it's possible to add a variable into options, where user can assign, how many sublevels he need or, put the choice into album creating page, where user can assign what he want to add - album or subcategory.
When you resolve this wish, I'm ready to donate your project :)