It's because you still have the categories in the array when you already assigned them. What you can do is to do the function where you pass the argument as a reference, and the in the foreach loop to have the ability to clear the array from that already assigned category. Simple implementation below.
function getChildren(&$rows, $p = 0) {
$r = array();
foreach($rows as $row_id => $row) {
if ($row['parent_node']==$p) {
$r[$row['product_category_code']] = getChildren($rows, $row['product_category_code']);
unset($rows[$row_id]);
}
}
return $r;
}