Theme suggestions not working for custom templates
Have you tried making the template name and pattern in the hook_theme implementation uppercase like this:

  'template' =&gt; 'MYMODULE-theme',
  'pattern' =&gt; 'MYMODULE_theme__',


You can also try to remove the pattern completely. It doesn't seem to be necessary at least in the example use case.

Preprocess functions for theme suggestions doesn't work in Drupal 7, and that's why you are manually calling them in your preprocess function. They are being added to the array so they are called but they are not in the correct format so that theme system could handle  them.