I solved this problem when I wrote Cascade, which uses a Postgres backend to manage an index of resources. The issue is the same-- you have a tree of categories that you want to organize. You can download the source code here. I recommend version 1.3.7 at the moment for your purposes. (although it's not to be considered "stable").

In short, I used a different data model which made things easier for me. It's basically a adaptation of what Phillip Greenspun describes here. It allows you to select all your messages in threaded ordered with one select statement, which I like.

To save you a bit of looking, here's my routine that creates a list much like what you are doing above. This of course depends on having your data model set up as mine is.

# used for selecting a new category to attach this item to. 
sub _new_category_id_box {
    my $item = shift;
    my $name = shift;

    my $tbl = $Cascade::DBH->selectall_arrayref("
        SELECT id, name, (length(sort_key)-2) as level 
            FROM category 
            ORDER BY sort_key");

    my %parents;    
    my $q = new CGI;
    my @p_ids;
    foreach my $row (@$tbl) {
        my ($id,$name,$level) = @$row;
        $parents{$id} = ' 'x$level.CGI::escapeHTML($name);
        push @p_ids, $id; # we keep the ids in a seperate array to pre
+serve sorting
    }        

    $q->autoEscape(undef); # we need to turn this off for the spaces i
+n the list to show up correctly. 
    
    return $q->scrolling_list(
        -name=>$name,
        -values=>[@p_ids],
        -labels=>\%parents,
        -default=>$item->category_id,
        -multiple=>0,
        -size=>1,
    );
}
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