After many more hours of sweating, here my findings lol.

There are a few catches to using several categories... the biggest one is you can select only one category to use the catalog with. Ever since jorditr released his awesome grid module, I wouldn't have it any other way, it displays everything just the way I want it. Another reason, I found out that when I create other categories I can't add term pics as I can with the catalog.

So even though the single category with multiple terms in multiple levels is absolutely less than ideal, atm it's the only solution I see... with my limited understanding anyway.

I have looked at just about all the posts and explanations on the Drupal site about taxonomy, but they are either too limited or too complicated, and never a step by step explanation how to do what I am looking for. Isn't there anybody else who uses a categorized webstore that guides you to what you want in just three clicks?

Ok here is another way of putting it, in slightly different terms to get away from clothes for a moment, lol. Suppose I have a webstore that sells items that are blue, red and yellow. These same items could be small, medium and large, and square, round and triangle. So I could have a small blue triangle, or a large red square, any combination of the three is possible.

So when people visit the site, they would be presented with a selection (buttons in a grid) to click on color, size or shape. They know they want blue! So they click color and then blue, immediately they see all items in blue. That is too many! Now they narrow it down, they have a choice, either by size or shape. Round, for sure. Ok, they see all items that are round and blue. Still too many! They want a medium sized product, so they click medium. Voila, just what they were looking for, every object they see now is blue, round and the right size!
Any combination is possible, another customer might be looking for something that is definitely square, size and color are of secundairy importance, so they go about their selection in a different way. In all cases, they get guided through their selection and in just a few clicks reach their goal.

The catalog does this partly, you can select the three main categories, say shape, size, and color (or, in our case, gender, type and size). Then you get a subselection, in case you choose gender and then boys, you see ALL the boys outfits and that is all there is to it. We can live with that, but if the catalog could do all of the above, we would be soooooooooo happy!!! I can't possibly be the only one with this wish?

I have played with views as well, and yes you can create selections like that, but truth be told, they look like hell......... and they are not really user friendly at all. Customers (which in our case will likely be housewives with young children) wish to see nice looking buttons, not horrible looking selection tools that look like they need a course in programming, heh.

Not trying to bug you guys, but I am really stumped, and hopefully my questions will help others too... thanks ever so much for the time you have given me already. Jorditr, your module rocks, in fact Ubercart, even though still in its alpha stage, is by far the very best webstore software I have ever seen. If what I want in fact can't be done, I am still happy with what I've got!