I don't think the issue with the WordPress slugs would've had any affect on the iTunes Store approval process, but iTunes can be mysterious at times. Are you still waiting for their approval? If so, what's the URL to the PowerPress feed you submitted to them?
I'll admit that I tend to prefer Podcast Channels over Category Podcasting but I think Category Podcasting is gonna get a real boost in the upcoming PowerPress 7.0. I'm also a big fan of "if it ain't broke, don't fix it." I'm of the impression you're already using category podcasting so it might be best to just stick with that going forward. Having both category and channel-based feeds on the same site could lead to confusion.