Sorry, Ben: I just posted before coming back to this meta discussion; I should have done it the other way around. "Categorification" is inherently a vague and slippery word: there is no one meaning of the term, so one could define categorified product as you are doing, but it's not the categorification that comes naturally to my mind; categorical or tensor product is. Anyway, I think what I wound up writing (at least insofar as I repeat the point I made above) is probably at this point a better fit to Jan's question, but we can continue talking about it if you disagree.
]]>I understand your point, but I don't really agree with it; surely that topologist is saying that there is a fiber bundle over BG with fiber G which is contractible, which is a perfectly good categorification of the product. These questions are not precisely the same, but any good answer to one is a good answer to the other, and it's stupid to put them on separate pages. I strongly encourage you to answer Sammy's question instead of Jan's; I will happily vote it up.
]]>But my objection is that categorification of reciprocation, as in 1/1-x, is perhaps not a simple matter of rewriting the equation on both sides by 1-x and then categorifying that. For example, when a topologist writes a suggestive categorified equation like BG = 1//G, he surely doesn't mean that G x BG is homotopy equivalent to a point. So there is more to categorified reciprocation than simply reinterpreting it by multiplying both sides by the denominator. I was attempting to discuss such issues when the question was shut down.
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