Edit in JSFiddle

/*
 * jsMultiSelectTree
 *
 * I just stepped in some jQuery, could someone hand me something to wipe this off?
 *
 * Abbey Hawk Sparrow
 * 
 */


(function(){
    if(jQuery && jQuery.MultiSelectTree) { return; }
    (function(jQuery){ //jqrysx
        jQuery.fn.MultiSelectTree = function(options) { //jqrysx
            var object = this;
            var defaults = {
                element : '#multiselecttree',
                allowOrphans : true, //remove any orphaned nodes without complaining
                relationshipAttribute : 'ancestry',
                openGlyph : '▼',
                closedGlyph : '▶',
                selectChildren : true,
                selectNode : false,
                openToSelected : true,
                openDepth : 1
            }
            var closedGlyphValue;
            var settings = jQuery.extend(defaults, options); //jqrysx
            if(typeof settings.element == 'string') settings.element = jQuery('#'+settings.element)[0];
            if(!settings.element) settings.element = jQuery(this);
            settings.openDepth++;
            var tree = {};
            var getOption = function(id){
                result = false;
                jQuery(settings.element).children('option').each(function(key, item){
                    if(item.value == id) result = item;
                });
                return result;
            };
            var countFieldsInObject = function(obj){ //jqrysx
                var count = 0;
                for (k in obj) if (obj.hasOwnProperty(k)) count++;
                return count;
            };
            var is_object = function(mixed_var){
                if (Object.prototype.toString.call(mixed_var) === '[object Array]') return false;
                return mixed_var !== null && typeof mixed_var == 'object';
            };
            var addToTree = function(tree, id, value){
                var node = tree;
                jQuery.each(id.split('>'), function(index, key){
                    var cleanKey = getOption(jQuery.trim(key)).innerHTML;
                    if(!node[cleanKey]) node[cleanKey] = {'*':value};
                    else node[cleanKey]['*'] = key;
                    node = node[cleanKey];
                });
                return tree;
            };
            jQuery(settings.element).children('option').each(function(key, item){
                var descention = item.getAttribute(settings.relationshipAttribute);
                descention = descention=='' ? item.value : descention+'>'+item.value;
                tree = addToTree(tree, descention, item.value);
            });
            var recursiveListBuild = function(root, depth){
                if(!depth) depth = 0;
                var element = document.createElement('ul'); //jqrysx
                if(depth >= settings.openDepth) jQuery(element).hide();
                var count = 0;
                jQuery.each(root, function(key, node){
                    var listElement = document.createElement('li');
                    var link = document.createElement('a');
                    if(node['*']){
                        link.setAttribute('identifier', node['*']);
                        delete node['*'];
                    }
                    if(settings.linkClass) jQuery(link).addClass(settings.linkClass);
                    var label = document.createElement('span');
                    label.innerHTML = key;
                    jQuery(label).addClass('multiselecttree_label');
                    var spinner = document.createElement('span');
                    spinner.innerHTML = settings.closedGlyph;
                    if(!closedGlyphValue) closedGlyphValue = spinner.innerHTML;
                    if(countFieldsInObject(node) > 0) link.appendChild(spinner);
                    link.appendChild(label);
                    if(is_object(node)){
                        var sublist = recursiveListBuild(node, depth + 1);
                        link.appendChild(sublist);
                        jQuery(spinner).bind('click', function(event){
                            jQuery(sublist).toggle();
                            if(spinner.innerHTML == closedGlyphValue) spinner.innerHTML = settings.openGlyph;
                            else spinner.innerHTML = settings.closedGlyph;
                        });
                        var opt = getOption(link.getAttribute('identifier'));
                        if(opt.getAttribute('selected') != null) jQuery(label).addClass('selected_node');
                        var getFirstLeafNode = function(node){
                            var nodeList = jQuery(node).find('a');
                            if(nodeList.length > 0){
                                var sublistList = jQuery(nodeList[0]).find('ul');
                                if(sublistList.length > 0 && jQuery(sublistList[0]).children().length > 0) return getFirstLeafNode(sublistList[0]);
                                else return nodeList[0];
                            }
                            return false;
                        }
                        if(opt.getAttribute('disabled') == null) jQuery(label).bind('click', function(event){
                            var selected = opt.getAttribute('selected');
                            if(settings.selectChildren && !settings.selectNode){
                                var node = getFirstLeafNode(sublist);
                                if(node){
                                    var o = getOption(node.getAttribute('identifier'));
                                    selected = o.getAttribute('selected');
                                }
                            }
                            if(selected){
                                if(settings.selectChildren){
                                    var links = jQuery(sublist).find('a');
                                    jQuery(links).each(function(key, item){
                                        var option = getOption(item.getAttribute('identifier'));
                                        jQuery(item).find('span.multiselecttree_label').removeClass('selected_node');
                                        if(settings.selectNode || jQuery(item).find('li').length == 0 ){
                                            option.removeAttribute('selected');
                                        }
                                    });
                                }
                                jQuery(label).removeClass('selected_node');
                                if(settings.selectNode || jQuery(link).find('li').length == 0 ){
                                    opt.removeAttribute('selected');
                                }
                            }else{
                                if(settings.selectChildren){
                                    var links = jQuery(sublist).find('a');
                                    jQuery(links).each(function(key, item){
                                        var option = getOption(item.getAttribute('identifier'));
                                        jQuery(item).find('span.multiselecttree_label').addClass('selected_node');
                                        if(settings.selectNode || jQuery(item).find('li').length == 0 ){
                                            option.setAttribute('selected', true);
                                        }
                                    });
                                }
                                jQuery(label).addClass('selected_node');
                                if(settings.selectNode || jQuery(link).find('li').length == 0 ){
                                    opt.setAttribute('selected', true);
                                }
                            }
                            return false;
                        });
                    }
                    listElement.appendChild(link);
                    element.appendChild(listElement);
                    count++;
                    if(jQuery(sublist).css('display') != 'none'){
                        spinner.innerHTML = settings.openGlyph;
                    }
                });
                if(settings.openToSelected) jQuery(element).find('span.selected_node').parents('ul').show();
                return element;
            };
            var el = recursiveListBuild(tree);
            jQuery(el).addClass('multiselecttree');
            jQuery(settings.element).after(el);
            jQuery(settings.element).hide();
            jQuery(el).show();
            return this; //jqrysx
        }
    })(jQuery);
})();


jQuery('treeselect').MultiSelectTree({
    element : 'treeselect',
    relationshipAttribute : 'heredity'
});
.multiselecttree {
  line-height: 18px; }
  .multiselecttree .selected_node {
    color: black; }
  .multiselecttree .multiselecttree_label {
    padding-left: 1px;
    cursor: pointer; }
  .multiselecttree .multiselecttree_label:before {
    margin-right: 3px;
    display: inline-block;
    height: 13px;
    width: 13px;
    background-color: #CCCCCC;
    content: '\A0';
    background-color: #ececec;
    background-image: -webkit-gradient(linear, left top, left bottom, from(#ececec), to(#a8a8a8));
    background-image: -webkit-linear-gradient(top, #ececec, #a8a8a8);
    background-image: -moz-linear-gradient(top, #ececec, #a8a8a8);
    background-image: -o-linear-gradient(top, #ececec, #a8a8a8);
    background-image: -ms-linear-gradient(top, #ececec, #a8a8a8);
    background-image: linear-gradient(top, #ececec, #a8a8a8);
    box-shadow: inset 0px 0px 3px #686868;
    -moz-box-shadow: inset 0px 0px 3px #686868;
    -webkit-box-shadow: inset 0px 0px 3px #686868;
    -webkit-border-radius: 2px;
    -moz-border-radius: 2px;
    border-radius: 2px;
    border: 1px solid #626262; }
  .multiselecttree .selected_node:before {
    content: '\2713'; }
  .multiselecttree ul {
    margin-left: 20px; }
.multiselecttree_label {
  color: grey;
  margin-left: 3px; }
<select multiple name="selector" class="treeselect" id="treeselect">
    <option value="1" heredity="">An Item</option>
    <option value="2" heredity="1" disabled>A Test</option>
    <option value="3" heredity="1>2">Another Test</option>
    <option value="4" heredity="1>2">A Test3</option>
    <option value="5" heredity="1">A Test4</option>
    <option value="6" heredity="1">A Test5</option>
    <option value="7" heredity="1>5">A Test2</option>
    <option value="8" heredity="">fsfdsfg</option>
    <option value="9" heredity="">werttg</option>
</select>