This image is from Retail. I don't know if it acts the same way in Classic.

Well the elite/skull icon remaining is intended, if you wish to disable them in Headline mode you can change it in the Theme Customization by changing the Style Mode to Headline/Text-Only and unchecking Element Enabled for elite/skull icon.

As for the highlighting issue, it should be fixed as of the latest release.

This is most likely related to the highlighting options and them not getting disabled for headline mode properly. I'll look into it later today, but if it really annoys you, you can turn off highlighting on mouseover and it should go away until it gets fixed.

It's also worth noting that, along with this bug, elite unit's skull icons don't disappear either when the health bar is hidden.