I haven't looked at it - but since you are using expanded mode - you might need to go beyond the template modifications and into the postlist.php script. Particularly the "show replies" function. That's what displays all the follow up replies and all the indentations.
I don't know if I'd know how to do it - my head always hurts when it involves playing with the show replies function. LOL But I *think* that would be the place to start looking around.
