FYI: Here’s a solution that works for me…
1. If you have a two-word category like “Breaking News”, re-name it in the category admin to “Breaking-News”.
2. Turn PHP “on” for your template and set the Parsing Stage to “output”.
3. Add the following code to template where you would like the category name to appear without the hyphen:
<?php $category = str_replace('-',' ', '{category_name}'); print "$category"; ?>
Your category_name will now print as “Breaking News” - but the URL will retain the hyphen.
joe