I think I kinda understand what you want to achieve. You will have a better chance by playing with the menu.css file I think.
As far as markup’s concerns, the subcategories are wrapped inside the category, thus it looks exactly like what you want to achieve visually. Just turn off the CSS style from your browser so that you can see it clearly.
<ul> <li> child1</li>
CSS tips: float or display inline the category and childcateogry
Presentation wise, I can’t picture how you would want to do it this way: “category1 - child1-child2 category2 - child1-child2 “
edit: One more thing, the ‘top.php’ uses mouseover to trigger the dropdown behaviour. You will need to hack the code too.