@pfaffman I’m unable to reproduce this issue both in my development environment and personal site. It is working properly for me.
On /categories page, if a muted category has subcategories which are not muted then it will appear to display the list of sub-categories.
here is the old fix
https://github.com/discourse/discourse/commit/57bbcf4c5db4a99d2e01324ee2f172b741fcc5f9