Chuck, I can tell you that it definitely has nothing to do with my menubar mod or any other hack, because it was doing the same thing when I had a clean install of 2.5, and also when I upgraded to 2.6 which where all fresh files.
I think I've figured out what's happened Chuck.
Upon a closer look, I notice that when people place an ad into Massachusettes, "User" becomes a part of the path to their ad. For example, when you click on the category "boston", here is the path:
Home » Rentals by State/Province » Massachusettes » Users » Boston
It SHOULD be Home » Rentals by State/Province » Massachusettes » Massachusettes Residential Rentals » Boston
When you click on "Massachusettes Residential Rentals", you get
Home » Rentals by State/Province » Massachusettes » Users
Massachusettes Residential Rentals is cat=500
So what's happened is that "Users" must have somehow been assigned cat=500 somewhere in the PP code.
I suspect that anyone who has 500 or more categories will run into the same problem. Is this correct?