As an irregular consumer of LW, a fine grained sub system would be fantastically useful since, without having to sort through a lot of posts, I could scan the last couple of weeks or months of submissions on topics of interest.

But, rather than determining categories first, it might be useful to do rough counts of number of articles on a given topic, posting frequency, etc. You want to make sure that you have critical mass before you split things apart. Given this, as other people have suggested, retaining an "All" category, especially for the front page, seems very useful.