Magento – Edit drop down menu in RWD theme

I tried to replicate what you have going on with your site, and i was able to get the same results by setting my category top navigation (found in the admin under system->config->catalog->catalog->category top navigation to 1 instead of the default 0.

The setting is there for you to control the depth of the of the menu system. So if you have categories that go 4 or 5 deep, the menu can become hard to navigate for the users. When set to 0, there is no filtering used, if you were to set it to 2, you would get your root category plus the next set of sub-categories.

Try changing that back to 0 and see if you get a different result.