Subselects are already available in MySQL version 4.1, which is still in alpha, though.

In this particular case, the subselect could be replaced by a join.

Assuming that (from what I see in your example) table1.category is a foreign key for table2.id, then you can rewrite the query as follows

SELECT 
    table1.* 
FROM
    table1 
    INNER JOIN table2 ON (table1.category=table2.id)
WHERE
    table1.category = 1
    OR table2.parent_id = 1
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