In case you want it, here is an updated XML and an updated FORUMHOME html that needs to be inserted according to Chris M's instructions:
HTML Code:
<!-- latest threads -->
<if condition="$show['latestthreads']">
<tbody>
<tr>
<td class="thead" colspan="2">
<a style="float:$stylevar[right]" href="#top" onclick="return toggle_collapse('forumhome_latestthreads')"><img id="collapseimg_forumhome_latestthreads" src="$stylevar[imgdir_button]/collapse_thead$vbcollapse[collapseimg_forumhome_latestthreads].gif" alt="" border="0" /></a>
$vbphrase[latest_threads]
</td>
</tr>
</tbody>
<tbody id="collapseobj_forumhome_latestthreads" style="$vbcollapse[collapseobj_forumhome_latestthreads]">
<tr>
<td class="alt2"><img src="$stylevar[imgdir_statusicon]/forum_new.gif" alt="$vbphrase[latest_threads]" /></td>
<td class="alt1"><table width="100%">$threadbits</table></td>
</tr>
</tbody>
</if>
<!-- /latest threads -->
I have changed the template, which is now perceived better (see screenshot), and I've changed a few things in the code, you might wanna compare

Anyhow, this is a great hack, and I did click "Install".