Category, taxonomy structuring advice ..... challenge!!

Hi all, i need some advice on how to structure my taxonomy/category information.

Basically I want to do something quite simple and common I think. I want the user to select an item, then depending on that item there are further option sets, and I want the user to select one item from each set.

Now specifically my case:

I have a custom module called Order which works fine, and I want the user to be able to select what kind of medium it is on, and some medium specific options, some of which affect price, some of which dont.

I am using the categories module because I need different info assigned to different stages of the taxonomy.

The first basic tree I came up with is:

Mediums (container)
--- Canvas
      --- Stretched
      --- Unstretched
--- MDFBlock
      --- 12mm
      --- 18mm

Canvas, MDFBlock are Medium Category type flexinodes. On a seperate page I list these with a blurb on each, and a few images per Category.
Stretched, Unstreched, 12mm, 18mm are Medium type flexinodes - these have no images assigned but have a price/cm^2. Orders placed must be one of these - on order_validate i check the $node->type against Medium to make sure Medium is picked and not a Medium Category (i.e. Canvas, MDFBlock etc.) and calculate a price based on dimensions entered etc.

So far this works perfectly, but the complication comes here. I also want to add medium options, which depend on the selected Medium Category, not the medium itself. E.g. For canvas there are 2 options wrapping (wrapped or not), wood thickness (1", 1.5"). For MDFBlock the edges can be painted black, white or left natural.

So I have been going crazy trying to figure out how to do this all!

Two ideas come to mind, both arent very nice and involve duplicating data which I hate.

One is creating a brand new tree of categories called Medium Options:

Medium Options (container)
--- Canvas Options
     --- Wood Thickness
          --- 1 3/4 inch
          --- 1 inch
     --- Wrapping
           --- gallery wrapped
           --- no wrapping
--- MDF Block Options
     --- Side Paint
           --- matte black
           --- natural MDF
           --- white emulsion

So there are 2 dropdowns for the user. The user selects a medium from the first tree, then an option from this tree.
The downsides of this are:
- Medium Categories are duplicated
- The user can select an option for a different medium category than the one he selected!! (I had a look at activeforms module but couldnt figure out how to use it in this case!)

The other solution is duplicating the options and placing them directly into the mediums tree, so there is only one tree and one dropdown for the user:

Mediums (container)
--- Canvas
      --- Stretched
            --- Wood Thickness
                  --- 1 3/4 inch
                  --- 1 inch
            --- Wrapping
                 --- gallery wrapped
                 --- no wrapping
      --- Unstretched
            --- Wood Thickness
                  --- 1 3/4 inch
                  --- 1 inch
            --- Wrapping
                 --- gallery wrapped
                 --- no wrapping
--- MDFBlock
      --- 12mm
           --- Side Paint
                 --- matte black
                 --- natural MDF
                 --- white emulsion
      --- 18mm
           --- Side Paint
                 --- matte black
                 --- natural MDF
                 --- white emulsion

This is a nastier solution I think, much more data is duplicated, and the resulting dropdown is too ugly and doesnt make sense.

Ideally I want 2 dropdowns, but the 2nd dropdown shoudl update dynamically to only show the options based on the category chosen in the first step - and obviously the category information shouldnt be duplicated.

This seems like something which would be needed quite a lot but i cannot figure out how to do it!! any ideas?!