How can publishers create hierarchical taxonomy terms during node creation? I have a chicken and egg problem in terms of allowing users to classify and populate their own sections of the site.

I need users to be able to hierarchically classify their content on the fly. I think this means I can provide them with a term reference field. However, the term reference field only gives a predefined selection. The fully populated taxonomy would need to exist before hand.

I'd like to use taxonomy based URLs to make everything seamless: i.e. /section/subsection/node. I just don't know how to get lay users to easily populate these taxonomies on the fly.

Is there a widget which would allow users to add terms to a term reference field during node creation? AFAIK, only tags can be created on the fly, which doesn't help my URL system.
The Hierachical Select Module allows you to enable on the fly term addition into an ordered taxonomy.

It's unfortunately under minimal developent, but is available for D7 and gets the job done. If there are better options, pleaese let me know, but I think this should handle the above use case for now.