How to modify term reference field in Drupal 7 custom content type?
Try the Taxonomy Term Reference Tree Widget.


  This module provides an expandable tree widget for the Taxonomy Term Reference field in Drupal 7. This widget is intended to serve as a replacement for Drupal's core Taxonomy Term Reference widget, which is a flat list of radio buttons or checkboxes and not necessarily fit for medium to large taxonomy trees.


Sounds like it would be perfect for your needs, but if not it's fully themable and already has the jQuery functionality built in so would be a very good place to start.