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Shipping by category not exactly working


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I have one category of items that I want to have free delivery, because they are things that can only be ordered by people local to me and I am going to hand deliver them.

So, I set the shipping for all my categories to $4.95, and then set the shipping for that one category to $0. But when I get to the checkout screen, whether I have items for that category or not, I am seeing both $4.95 and a blank shipping option in the pulldown, which means that someone who is ordering any product could select the "free" shipping.

Is this a bug, or do I have something else set wrong. Since there is no way to do coupons in version 3, is there any other way I can offer Free Shipping only to a certain set of customers?

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