I run current on a separate partition, but KDE4 not 3.5.10.
In 3.5.9 you can set these handles to fade or, by locking the toolbar, have them disappear entirely.
Not exactly the answer you were looking for, but at least you won't have to look at them.
Right click on the panel (kicker) and select configure panel, then the appearance tab.
Below the section to set transparency is an advanced button. You can select "fade" or "hide" here.
You can choose to lock the panel when you right click on it - same effect as "hide" above I think.
As far as changing the arrow size, it might be related to the font or font size used by the panel, but I would be guessing. It may also be related to dpi setting - another guess.