How Do I Build Efficient Category Trees?

I am currently putting together an eCommerce site. I have almost everything
in place, but I am not happy with the category system for our products.

There are around 2500 products in a SQL Sever db, each assigned 1 of 300 odd
categories. Currently, I have statically built the category tree but wish to
automate this task as it is becoming increasingly difficult to manage.

I have googled plenty of info, specifically for ADO data shaping. Is this
the right route to take, especially considering each branch of the category
tree may differ in depth of categories? How exactly do other eCommerce sites
automate this task?

I would also want to be able to copy the category system that provides links
to previously selected categories i.e.

Category 1 > Sub Category 2 > Sub Category 3 > etc etc

Is this possible with the SHAPE command? Are there other methods of
performing this task?

I am particularly concerned about the database taking a major performance
hit from all of these SHAPE queries, which would be required on every
category page. Could I use a stored procedure, and how much would it improve
performance? Considering I will be hosting on a shared server, I want to
make this as efficient as possible.