Something we all overlooked, although we were missing a critial peice of information...
This is MTEXT, not TEXT, and the MTEXT contains embedded formatting, which overrides the properties of the applied textstyle.
You need to get rid of the embedded formatting if you want this MTEXT to take on the properties of the textstyle assigned to it.
Edit an MTEXT item, and when you are in edit mode, press Ctrl+A to select all the text, then right-click and select Remove Formatting > Remove All Formatting.
There is also a lisp routine available here to globally remove embedded formatting from a selection set of MTEXT entities.
http://cadabyss.wordpress.com/