Creating subcategories with acts_as_tree

um ... i don't fully get what your problem is.

instead of listing the categories in a HTML List, put that list in a select dropdown box, set the name to "category_id", and the value of the options to the categories id values.

then when you submit the form and "create" gets called, params[:news][:category_id] will contain the selected news category. save the news, and you're done.