I would like to follow up with this question because I was able to find an answer, and I will make a tutorial for it as well on my YouTube Channel this coming week; I will post on this thread again with the link.
The quick answer is:
In BaseEditor.ini, there is the following:
; Class picker dialog settings
; LocText refers to the localization id for the descriptive text to show next to the icon in the picker
+NewAssetDefaultClasses=(ClassName="/Script/Engine.Actor", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.Pawn", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.Character", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.PlayerController", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.GameModeBase", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.ActorComponent", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.SceneComponent", AssetClass="/Script/Engine.Blueprint")
What you can do is go to your DefaultEditor.ini and add the following lines:
[/Script/UnrealEd.UnrealEdOptions]
+NewAssetDefaultClasses=(ClassName="/Script/Engine.Actor", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.Pawn", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.Character", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.PlayerController", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.GameModeBase", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.ActorComponent", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Engine.SceneComponent", AssetClass="/Script/Engine.Blueprint")
+NewAssetDefaultClasses=(ClassName="/Script/Hero.HeroGameplayAbility", AssetClass="/Script/Engine.Blueprint")
The option in bold is my new category that I wanted to add. Here is what my Pick Parent Class dialogue looks like now:
It took a lot of digging in the source code, but I was able to find what I needed. I hope this thread helps anyone else looking to achieve the same thing. Thanks again!