function filter_blog_activity_by_category( $a, $activities ) {
    global $bp;

    if ( is_site_admin() )
        return $activities;

    foreach ( $activities->activities as $key => $activity ) {
        if ( $activity->component == 'blogs' ) {
            $blog_id = $activity->item_id;
            $post_id = $activity->secondary_item_id;
            switch_to_blog( $blog_id );
            // Pull up the post using $post_id and get_post()
            // Get the categories with get_the_category()
            // If the post is in the excluded categories, then
                unset( $activities->activities[$key] );
            restore_current_blog();
        }
    }

    /* Renumber the array keys to account for missing items */
    $activities_new = array_values( $activities->activities );
    $activities->activities = $activities_new;
    return $activities;
}
add_action( 'bp_has_activities', 'filter_blog_activity_by_category', 10, 2 );