I think this has to be a pop up dialog that is triggered by setting the notification state for the category.
It should probably be something like
Category Notifications
You will begin watching any newly created topics in the bugs category.
Do you want to watch all 3,906 existing topics in the bugs category, too?
Yes, watch all No, just new cancel
So this would also let you reset watch state on a category, e.g. set all topics in that category to “regular” when you had it set to “tracked” for a few days.