Categories, yes, but I think a slider bar (instead of a toggle: mute or unmute) would be good, because some mutuals will literally take over your timeline, so you want to dial them back, but you still want to see what they're up to occasionally.
AND you might want to randomize your timeline since some ppl only post during certain times of day, so you consistently miss them!
We need our own TL pruning and ordering algorithm. Client-side, even.