In Template Manager (Ctrl+Shift+N), open the "Delete category" dialog (use "gear icon", select "Delete category")

One change in the dialog box:

1. Do not show the “system” categories from share directory (because they cannot be deleted)

(plus assuming that bug 138975 is resolved so that "None" does not appear, unless it is a user-created category -- which is already possible).

Three changes in the "action" that results from clicking "OK" after selecting a category. 

1.     If a category subdirectory only has templates in it, then

      a.  show a new dialog box:  

        This category has templates.  Do you want to delete or move them?

        Help    Delete templates     Move templates     Cancel 

      b. If “move templates” is chosen, then show Category dialog box again to choose to which category they should be moved. 

      c.  For both "delete" and "move", delete the subdirectory that corresponds to the category.

2.   If a category has other files then templates, follow same actions as previous point, but do not delete the subdirectory.

    NB.  Use groupuinames.xml so that subdirectory is not shown.

3.   Better handling of category with same name across two directories.

To understand problem.

1.  Make a new category (e.g., NewCat) and move or import some templates to this category. 
2. Add a new path for templates  (i.e., Use Tools - Options (Alt-F12) – LibreOffice – Paths – Templates), Edit Template, add a new path and make this new path as default.
3.  Move/import a template (that you do not mind losing) to “NewCat”

(Before proceeding, look in your file system, to confirm that there is a subdirectory “NewCat” in the “Default” directory that you just set in Options and that the just-imported template is in the subdirectory NewCat.  Look also in your default userprofile, where you should see in templates/NewCat, the templates that you imported.)

4.  Use Template Manager to delete category “NewCat”
    Actual result:  
     - An error message is shown that the category cannot be deleted.
     - the NewCat directory (and its contents) in the “default path” directory is deleted.
     - The NewCat directory in the non-default path is not changed.

Expected result:   (should follow the procedures in nr. 2 and nr.3, with offering to move or delete templates – from both directories).

NB .  From user PoV, if you follow steps 1-4, then you would expect that all templates in “NewCat” are deleted or removed.  At present, this operation only works for the “Default Path”  – (which seems like an arbitrary limitation).