Yeah we are totally up for a revamp here. It is not particularly fun to use these controls and there are so many of them in so many different places. It would feel particularly wrong to move sidebar there cause it does not notify and this is “notifications → categories”.
We have discussed the idea of a unified UI for handling categories and tags user prefs, but it is still in the brainstorming phase.
@awesomerobot general idea is a single row per category or tag where you can decide what you want to do with it. Then show you a list of all the things you acted on with a search box.
I can certainly see us make progress here over the next few months.