I'm on v0.6.1 and that working fine on mine, looks like a local issue.
[Solved] Theme Lavendar: Categories overlap if the above category has an image.
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you can see it (mostly on chrome) at californiamotorcycleforum.com If i refresh there's a 50:50 chance it'll be fine. It appears that they're properly spaced when it's just text. The longer the image the worse it seems to be.
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Fixed