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If I get it correctly, I believe you should be able to do it with only CPT UI. For the product category, you need to set the Hierarchical option to “True”. With this option enabled, you can set the parents of the taxonomies and modify the template to show only the child taxonomies if it has any. If it doesn’t have child taxonomy, then you can show the products that are assigned to that taxonomy instead.
This page should give you more idea about it: http://wordpress.stackexchange.com/questions/691/the-difference-between-hierarchical-and-non-hierarchical-taxonomies.
I hope this makes sense 🙂
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