Thats just my crappy photoshop skills in action. I'd try to compress it to push actual text further up on those pages. My concern is that it pushes the rest of the items past your view on even a 1024x768 screen, and since people hate scrolling (especially shoppers) it might be more harmful than good. Oh for some A-B testing capabilities.
My thoughts exactly, About the frame, I wouldn't color it or if I did I would use very light colors so that i won't distract the eye from the products.
Yeah I wouldn't make the colors too vibrant due to exactly what you said. There is just something about a red highlighted text that makes my eyeballs ping with wonder. Overall great layout.
The item is a little unclear, but the frame is so nice that I wouldn't mess with it. Maybe trying to make the item look clearer, like stronger colors or something.