Yes in vbulletin 4.2 and higher with the new navigation menu we will be integrating into the vb
menu if using the enhanced integration.
You need to set on index options that top level categories do not contain information that way it will be the long bar
Now as far as your cat avatar thing if you never came to me with an issue to fix I do not know what to tell you. I do not have this issue as seen on my site or any site I have seen so I would need more info here. Basically the thumbnail column would only be updated if it is equal to 0 meaning empty.