Paul, I like your solution.
1) The semantic relationship of parent menu item to sub-menu is
obscured if not lost.
Provide a structural label for top-level navigation, this will make the
relationship far more explicit. Using the labels from you main
navigation device as headings for the sub-menus will also serve to
strengthen the relationship.
2) Because the sub-menu is not structurally nested within the parent
item, some visual layouts of the menu will be difficult or impossible,
such as the nested folder metaphor.
You can enhance the layout with a little javascript to achieve any
layout you can imagine, you just need to account for the non-javascript
design.
kind regards
Terrence Wood.
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