PanelBar: A custom template can not be set to a PanelBarItem, using a ControlTemplate DECLINED: This issue is not reproducible with 2016 R3 official release.
Second level items cannot be styled to look like first level items. DECLINED: SecondLevelItemsStyledLikeTopLevelItems SDK sample showing approach to styling PanelBar with more than two levels of PanelBarItems is available since R3 2016 Official Release. https://github.com/telerik/xaml-sdk/tree/master/PanelBar
Now if you add a content to the panelbar the content inside will receive tab navigation only once due to the items control nature of the control. The XAML team has recently reviewed the status of this issue and won't be addressing it in future releases. In order to make the content (items) of a specific RadPanelBarItem (X) focusable with tabKey, set TabNavigation="Local" on X.