Implementing a tricky wordpress menu (nested categories + thumbnails)

although @roikles offers a way to do it, I don’t think it is very flexible as you will have to go back in the code when you want to add a new category.

Another way of doing it can be to add the image of the subcategory as the description of the subcategory.
To be able to do so, you will first need to allow XHTML in category descriptions. Add this line to your functions.php:

remove_filter( 'pre_term_description', 'wp_filter_kses' );

Then you can echo that description with wp_list_categories

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