Yes , see what you mean now. Didn't read it properly :-)
I found the solution now anyway. Just in case you need it it's below.
Firstly you need Data Assist installed (I was using a standard Dreamweaver Insert hence couldn't see how to make the changes to the insert behaviour)
Follow steps 1 & 2 in my first post, when it comes to the inset use Data Assist Insert and in the drop down box at the bottom select (in my case) Categories from the new recordset you made for categories, and the same for subcategories.
Virtually the same thing that you are doing without using another (invisible) page.
Thanks for you help and I think this would probably have worked for your problem as well.