<p>I am trying to come up with the best way to render some hierarchical data in to a nested unordered list using ASP.NET MVC. Does anyone have any tips on how to do this?</p>

You mean... you want some sort of tree view?
You can actually get the treeview control to work... but you have to wrap it in server side form tag to function.  You'll get the usual nastiness that that brings (like generated ids and viewstate) but it will work from a rendering perspective.
If you want to just create  tags and nest them, it would be pretty easy to do with foreach() loops.