I have added this feature, initially including only those tags that I've used more than 20 times, & adding an "all categories" link that goes to my del.icio.us homepage.
Excellent. Thanks, Mark!!
Update 7/27: After visiting Miles to Go, where there are del.icio.us categories in the works too, I have decided that I like drop-down menus for making the sidebar tidy. Miles to Go even shows different drop-downs, depending whether you're on the homepage, a post page or an archive page. So, more menus. The code for the archive menu for blogger came from Li Zhao. Here's my implementation:
<p style="text-align: center">
<select name="ArchiveMenu" onChange="location.href=this.options[this.selectedIndex].value;">
<option value="/">- Archives -</option>
<option value="/">Current Posts</option>
See other posts in Blogger Hacks: The Series