Yes, you can define your custom style for any of the timeline items, just as demonstrates in our demos. Here is a link to our online Silverlight demos, the approach is the same for WPF.
Regarding your second question - I am not quite sure you will be able to achieve this result with a custom template for the timeline items, but you can try. Basically, we are working on support for annotations that will help you in this respect but I cannot commit a specific timeframe for the availability of this feature.
All the best,
the Telerik team
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