If you provide a style then the theme wouldn't apply since in WPF there can only be 1 local style. For a discussion of theme vs local/implicit styles and our theming please refer to the following page.

With regards to the spacing, that is just the way the default templates are set up for that theme. The template for the TabItemEx was designed to emulate the look of the Office 2007 ribbon tabs where the tabs are smaller until you hottrack over it and the hottracked look has a glow. Since the controls are lookless all of this is handled within the template so if you need to change the look outside of basic properties like the Background, BorderBrush, etc. on elements then you usually need to retemplate them. In this case you may be able to get close to what you want by setting the InterTabSpacing of the xamTabControl to something like -5. Note if you use to much the items are going to overlap since the z-index of the elements doesn't change based on mouse over (again you would have to do this in a style or template trigger).