Hey!
This already happens, a category includes all its sub categories, and the posts they include. E.g. if we label a product as 'brilliant red' or 'blood red' we would expect it to show up in the parent category 'red'.
This is the normal behaviour in standard post and taxonomy archives, but the CRED form code being used may not behave this way, I'd need to look at the code to determine this. It may be that it's deliberately changing this behaviour as it can sometimes confuse people whose mental model doesn't match ( literal parents and children, rather than nested groups/buckets )