To answer myself, yes it seems it is possible. I added a custom SQL report that included a category filter and all seemed to work ok. If anyone else needs to do this the SQL is as below:
SELECT u.firstname AS 'Name' , u.lastname AS 'Surname', c.fullname AS 'Course', cc.name AS 'Category',
CASE WHEN gi.itemtype = 'Course'
THEN c.fullname + ' Course Total'
ELSE gi.itemname
END AS 'Item Name', ROUND(gg.finalgrade,2) AS Score,ROUND(gg.rawgrademax,2) AS MAX, ROUND(gg.finalgrade / gg.rawgrademax * 100 ,2) AS Percentage,
IF (ROUND(gg.finalgrade / gg.rawgrademax * 100 ,2) > 79,'Yes' , 'No') AS Pass
FROM prefix_course AS c
JOIN prefix_context AS ctx ON c.id = ctx.instanceid
JOIN prefix_role_assignments AS ra ON ra.contextid = ctx.id
JOIN prefix_user AS u ON u.id = ra.userid
JOIN prefix_grade_grades AS gg ON gg.userid = u.id
JOIN prefix_grade_items AS gi ON gi.id = gg.itemid
JOIN prefix_course_categories AS cc ON cc.id = c.category
%%FILTER_CATEGORIES:c.category%%
WHERE gi.courseid = c.id AND gi.itemname != 'Attendance'
ORDER BY `Name` ASC