Hmmm... bizarre, I restarted the project, deleted the ToolBar and the ImageList and I tried again. It's formatting is fine now. It was likely a result of initially selecting 22*22 bitmaps for the buttons, and then later clearing the ImageList and reselecting 16*16 bitmaps. The ToolButtons maintained the size that was defaulted for the 22*22 bitmaps.
In other words - user error.
Sorry for the inconvenience.