I've replicated what you're seeing. A workaround is to set max pages to 1 after creating the replication destination profile. Do a walk with that to get the categories primed. Then start replicating data to it. The target profile should never be walked once replication starts.
No. It means don't do any walking in the replication target. Stop any that's running and make sure nothing's scheduled.
If your existing replication target profile doesn't show categories, start a refresh walk, then stop it right away. See if that gets the categories dropdown primed.