Drupal does rewrite url but can't load css/themes
Maybe I am missing something, but you shouldn't need the .htaccess rewrite.

It is likely that the 'conflict' is it rewriting the path to your styles. View the source and check what happens when you try to navigate to your css etc.

To achieve this effect all you should need to do (unless I am missing something) is to enable clean URLs, this will remove the index.php?q=. 

Then to add .html go to admin/config/search/path/patterns (with pathauto installed) and add .html after [node:title] or [term:name], whichever you are using.

So your patterns would look like:
[node:title].html
and
[term:name].html