The short answer is no. Any part of a button will be included in it's selectable area. That's not a limitation of encore, but of the dvd specification. You can however create a workaround, by creating separate menus for each button, so when you press the down arrow, it auto-activates the next menu, which shows your picture while the next button is highlighted. This has limitations, like not auto-activating when viewed on a software dvd player (computer), and the audio starting over when the menu changes.
Jon Geddes
Motion Graphics Designer
http://www.precomposed.com