i made a quick hack in my classes.php (wordpress 2.0) because i wanted to get rid of that as well and up to now it seems to work – but i am just messing around with a local test installation.
this is my new line 1057:
$this->category_structure = $this->front;
and my new line 1619:
$this->query_string = apply_filters('query_string', str_replace('%2F', '&name=', $this->query_string));
like i said, just some quick hack. it will definitely go wrong if your categories or entry names contain any slashes but i leave the bulletproof implementation up to someone who is more familiar with things.