It seems there is no way to assign multiple products to a category without manually editing each product and assigning it to a category.
It would be extremely helpful if we could do this in Manage Products.
So for example you could search for whatever you want and then check the ones you want and let us type in a text box what catagory we want to assign and then click save to update selected products.
text box should allow multiple categories by comma just like in dataflow.
OR let us search for products through manage categories, first choose which category and then have a new tab where we can search for products. Check the box next to which ones we want to add and then click save category.