Reduce gap between menu items?

Is it possible to reduce the gap (width) between Icons as show in the screenshot? I can reduce the height of the items and the gap between them but not the width???

I'm sorry, this is not possible right now. I'll add this option in the next version.

Also, the white highlight of the item is ugly, is there a way to make it semi-transparent or even change the colour?

You can change the colors in TLB Settings->Menu->Colors
Or change the skin.