I just hit this myself, you can hack the category widget to get around this. Since the excluder is filtering WP_Query, you’ll need to remove the filters for the category query – here’s how.
Find the query in cat-posts.php:
$cat_posts = new WP_Query("showposts=" . $instance["num"] . "&cat=" . $instance["cat"]);
Modify it to ignore filters:
$cat_posts = new WP_Query(array('showposts' => $instance["num"], 'post_status' => 'publish', 'cat'=>$instance["cat"], 'suppress_filters'=>1));
As with all plugin hacks, beware that a plugin upgrade will remove the modification.