I just did an import for someone, and it was similar to yours.

It was 'Top/level1/level2'

Their site had the first level of categories already added to his site, ie:
the top of his site started with 'Level3'

(which for you would be 'Top/Arts/Music/[level 3 sub cats]'

When I did 'append=0' and ran the new parse_rdf.pl file, the links and subcategories were all put into the proper locations.

I think a new updated version of this parse_rdf procedure is on the way, so today or monday you may see it.