Thanks for the feedback — this pushed the plugin in a genuinely useful direction.
A quick clarification on how the current behaviour works: the tiddler-link glyph appears on every node that carries a + prefix, at any depth. Plain text lines (no +) are structural group labels with no associated tiddler, so they don’t get a link. In the standard examples, the group labels (“Mathematical Precursors”, etc.) are plain text rather than + references — that’s why they have no link, not because of their indentation level.
That said, you identified two real gaps, and both are addressed in 0.13.0:
+ nodes can now have children
A + tiddler reference can have indented children. It renders as an expandable row: the tiddler’s own body (if it exists and has content) appears in the expanded panel, followed by the child nodes. This means every level of a hierarchy can be a tiddler:
<$simple-outline text="""
+ my-top-level-tiddler
+ my-mid-level-tiddler
+ my-leaf-tiddler
""" tiddler-label-link="yes"/>
tiddler-label-link attribute
Setting tiddler-label-link="yes" makes each tiddler item’s label itself a clickable navigation link. The disclosure arrows remain the only way to toggle a node open or closed. Navigating to a missing tiddler opens TiddlyWiki’s new-tiddler editor, so the outline doubles as a top-down scaffold: write the full structure first, then click labels to fill in tiddlers one by one.
Missing tiddlers now get the tiddler-link glyph too
Previously the 
glyph was suppressed for tiddlers that didn’t exist yet. That restriction is lifted — the glyph appears on all tiddler items regardless of whether the tiddler exists.
The Cuisine Outline demo illustrates all three features with a recipe-wiki outline where every level is a + tiddler and several entries are deliberately left as placeholders.
Auto-tagging
Automatically tagging a newly created tiddler with its outline context is an interesting idea, but it’s complex enough — and specific enough to individual workflows — that I’d rather not bake it into the plugin itself. TiddlyWiki already has good primitives for this ($:/config/NewTiddler/Tags, button action widgets, and so on), so a per-wiki solution is probably cleaner than a general-purpose plugin feature.