Create dropdown menu of all tags used in category

Try building a master $posttags array like so:

<?php 
$post_tags = array();
$the_query = new WP_Query( 'posts_per_page=50&cat=89' );
if ( $the_query->have_posts() ) : 
    while ( $the_query->have_posts() ) : $the_query->the_post(); 
        $posttags = get_the_tags();
        foreach( $posttags as $posttag )  {
            $post_tags[$posttag->slug] = $posttag->name;
        }
    endwhile;
endif;
?>

<ul class="dropdown filter option-set clearfix" data-filter-group="tags">
    <li><a href="#filter-tags-all" data-filter-value=".item" class="selected">All Tags</a>    </li>
    <?php  foreach( $post_tags as $tagslug => $tagname ){ ?>
        <li><a href="#filter-tags-<?php echo $tagslug;?>" data-filter-value="<?php echo     $tagslug;?>"><?php echo $tagname;?></a></li>
    <?php } ?>
</ul>

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