Hi Lee,
Your issue is a common problem that I've seen asked on the SCN. Unfortunately, I don't think there is a good solution with the standard functionality. I had in fact tried to provide this option in my blog Design Studio Innovation Series - Topic 5: A Best of Both Worlds - Implementing a Dynamic Hierarchy Filter by combining Standard and SDK Community Components but was unable to find a way to exclude parent nodes via scripting.
I think at the moment the only option is to consider 3rd-party SDK components.
Regards,
Mustafa.