Hi Debi -
No the wording still applies, but hopefully having the template dumping the profiles into the top-level category will motivate some discussion between the categorization project and the mexican-american war sub-project about what categories should be applied by the template, instead of just 'abandoning' them in a 'do not use' category.
It would be relatively simple to add a parameter to the template so that a unit can be specified for categorization purposes, with the default 'dumping ground' when a unit is not specified being Category:Mexican-American War, United States of America - A similar feature already exists for one of the other sub-projects (assigning people to specific tribes).
Alternatively, categorization for that sub-project could just be 'disabled'. This would defeat some of the the benefit of having a project template - but some projects choose to go that route. My opinion is that adding a template parameter(s) on a profile is no harder than manually adding a link to a category, and using templates can help standardize new category names (to a point) and if the categories ever need to be changed it can save a ton of work.