Regarding #1, if I understood you correctly, simply modify the below line in the CSS file to add additional up/down padding between each link:
Code:
#dropmenudiv a{
width: 100%;
display: block;
text-indent: 3px;
border-bottom: 1px solid black;
padding: 5px 0;
"
The 5px above is new, changed from the default 1px.
Regarding #2, I'm not up to speed on the latest techniques for adding round corners to a DIV, but simply do a search on Google. For easier integration you may want to switch to using Anylink CSS menu first, where the drop down DIVs are simply regular DIVs defined on the page where you can modify easily per the instructions of the rounded corner technique you've chosen.
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