Hi Rob,
You need to setup Parent-child-child tables and relationship. Category-Category-1 and Category-1 to Category-2 (child). Create the category-2 table with record ID as primary category-1 as reference field for setting up relationship. Then setup a proxy field on your relationship field to show category-2 instead of record id and use form rule to update the category. This way it preserves the values instead of only keeping child table record id(s).
Hope this helps.
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Babi Panjikar
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