Ok, tested this and it works ... :)
Here's how you can modify the format of the Categories value at runtime using jQuery.
1. Modify your template.html, place a div with a class around the Categories tag.
1: <div class="categorydiv">Categories: [CATEGORIES]div>
2. Open the Module settings, and expand the Advanced Settings section. You will see a Header and a Footer text area. Whatever you enter in those boxes will be output prior to the module output (Header) or after the module output (Footer). In the Footer section, enter the following text
1: <script type='text/javascript' language='javascript'>
2: $(document).ready(function() {
3: $(".categorydiv").each(function(){
4: $(this).html($(this).html().replace(/,/g,", "));
5: });
6: });
7: script>
3. Click update. Now your categories will be separated by a comma and 2 spaces. Feel free to modify the last parameter of the replace method if you want your categories separated by some other combination of characters.
What this does is inject some jquery to the page right after the repository module's output. The function will look for items that have the class you assigned to the div you put around your CATEGORIES tag in step 1, then for each one it finds, it will grab the text within the div. It then uses the replace method to look for all commas and replace them with a comma and 2 spaces.
That should do it :)