How can I hide tags on a child-category page, if that tag has not been used?

Yay, thanks to the help of a co-worker, I now have a solution to this 🙂

Tertiary navigation for the tags (templates/nav-tags.php):

// only load tags from the current page
$paged = (get_query_var('paged')) ? get_query_var('paged') : 1;
$args = array(
   'post_type' => 'easy_steps',
   'paged' => $paged,
   'category__in' => ($cat),
);
$second_query = new WP_Query( $args );

global $wpdb;
$tags = array();
$terms = array();
foreach ($second_query->posts as $post)
{
    $post_id = $post->ID;
    // get post tags for post
    $taxonomy = $wpdb->get_results(
        $wpdb->prepare("
            SELECT *
            FROM `hchw_wp2_term_relationships` tr
            INNER JOIN `hchw_wp2_term_taxonomy` tt ON tt.term_taxonomy_id=tr.term_taxonomy_id
            INNER JOIN `hchw_wp2_terms` t on t.term_id=tt.term_id
            WHERE tt.taxonomy='post_tag' AND tr.object_id=".(int)$post_id
        )
    );
    foreach ($taxonomy as $tag)
    {
        $term = $tag->slug;
        if (!isset($$term))
        {
            // populate tag
            $$term = new stdClass;
            $$term->term_id=$tag->term_id;
            $$term->name=$tag->name;
            $$term->slug=$tag->slug;
            $$term->term_group=$tag->term_group;
            $$term->term_taxonomy_id=$tag->term_taxonomy_id;
            $$term->taxonomy=$tag->taxonomy;
            $$term->description=$tag->description;
            $$term->parent =$tag->parent;
            $$term->count="1";

            $tags[] = $$term;
            $terms[$term] = $counter; // so I know what offset the tag is at in case I need to increase the count
            $counter++;
        }
        else
            $tags[$terms[$term]]->count += 1;
    }
}

if (count($tags) > 0)
{
    foreach ($tags as $tag)
        echo '<li id="tag-' . $tag->slug .'"><a id="tag-' . $tag->slug .'" href="" title="' . sprintf( __( "filter posts by %s" ), $tag->name ) . '" ' . '>' . $tag->name.'</a></li>';
}