Hi Guy. In terms of no-follow for page rank sculpting purposes, I've read the pros and cons of both and for me I've concluded I'd rather direct the juice where I want it to go rather than to block or prevent it from flowing where I don't want it to flow. No-follow can have unintended results, so I prefer the alternative.
Volume of categories and how to structure them is a challenge for a lot of ecommerce folks (me included). I've recently started flattening my site. While development of useful and intuitive sub-categories helps people find what they want on the 3rd or 4th click, crawl penetration suffers due to the depth. By flattening my site I mean reducing the number of sub-categories that can only be reached by other sub-categories - which is basically moving 3rd or 4th level categories up to the second level or top level (left nav).
A large and top ranking Toy Store I visit often to see how they structure their links has a top nav with categories, a left nav with categories and a sitemap in the footer. Each navigation entry has either different links in it or some different anchor text linking to the same pages. After much reading and apparent consensus among veteran users in this forum, I nixed the sitemap as unnecessary if I use good linking practice throughout the site. One Guru even suggested a sitemap can hurt your rankings if every page is linked to every other page with juice diminishing returns.
In my case, I created a left nav link to additional categories and put categories or sub-categories in them that were either: 1. Removed from the left nav because they were not important enough to be on the left nav 2. Removed from the left nav because on-page analytics suggested they didn't warrant being on the homepage. 3. Were a 3rd or 4th level category that on-page analytics showed there was enough demand to move its link to a second level or top level.
I hope this works for me and could of some help to you. Good luck.