You can now create yahoo-like directory site easily using our new category tool. The pages are build in static HTML files so it is very search engine friendly. You can have levels of profile categories and list users on them.
For the sake of simple example, let's say you are making a site about pets. You must first have a profile database field called "type" or "breed". Once you have that go to Admin -> Setup -> Categories and connect this field with categories feature. Now you can make a directory like this:
~ ~ Bulldog
~ ~ Terries
~ ~ German Shepard
~ ~ Korat
~ ~ Bobtail
~ ~ Van
Now, when a pet owner is registering a new account, she will need to select one of these categories from the dropdown. On the Admin panel, you will a list of them, you can either accept their selection, or change it. Then you will need to rebuild the directory from scratch using the "Rebuild" button. They will be show up in the new directory.
You can also add a "Suggest New" question on your registration form. Which will show up on the Admin Categories page.