Here is the way that the Category Discounts should/will work. The reason that I say "should/will" is because I'm the one who ponied up the money for this, so we can have "Mix and Match Pricing" in our cart.
Let's say that I have two "Master" categories, called "Dogs" and "Cats". Under "Dogs", I have "Chihuahua", "Shepherd", and "Mutt". Under "Cats", I have "Calico", "Long Hair" and "Short Hair". So, I have two master categories, each with 3 sub-categories underneath them.
Now, I'm running a quantity discount. If you buy 3 cats, I'll give you 50% off. If you buy 2 dogs, I'll give you 25% off.
So, scenario 1:
Someone buys 3 cats... 2 calicos and a short hair. THey get a discount, because they bought 3 cats under the "Cats" category.
Scenario 2:
Someone buys 2 cats and 1 dog. They do NOT get a discount, because the discount would apply for 3 cats, or 2 dogs, but not a TOTAL of 3 cats and dogs.
Scenario 3: THey buy 1 cat and 2 dogs. The cat would not be discounted, but the dogs would be discounted by 25%, because they bought 2 dogs out of the dog category, but they only bought one cat.
Scenario 4: They buy 5 cats and 2 dogs.
They get 50% off of the cats, because they bought 3 or more. They get 25% off of the dogs, because they bought 2 or more.
It wouldn't matter if they bought 2 calicos and 1 short hair, or 1 calico, 1 short hair, and 1 long hair, they would get the discount because all 3 were in the "Cats" master category.
Make sense?