Dynamically grow menu based on terms in vocabulary?
The Taxonomy Menu module will be able to handle that...


  Transform any of your taxonomy vocabularies into existing menus easily!
  
  Features
  
  
  Custom Menu per vocabulary
  Uses the default taxonomy term path or custom paths
  Integrate with Views
  Integrate with Pathauto: use URL/path aliases
  Does not interfere with other menu modules
  


The module page also links to a tutorial called How to add a block menu of tags (or other taxonomy terms) on a Drupal site in conjunction with the Menu Block module in case you need that functionality.