Do you plan on using the already existing tag(s) field as categories or do you want to use a separate managed list of categories?
If its the latter you could try using a module I made: https://github.com/IOTI/silverstripe-blogcategories. It does not have a built it dropdown for selecting a category on the front end but you could build one yourself. If you don't want or have need of the module you could look at my code and see how i added extra controller actions to the blog holder i.e it uses
"yoursitelink.com/blog/category/category-name" for filtering blog posts by a selected category.
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