How do I achieve 2 level tabs? Drupal 6 had an easy way to do this, but D7 doesn't.
I asked this question on the drupal.org forums, and I didn't get answer. Am I asking too much? I just want 2 level tabbed main menu where I can have full control over the link styling. 

Bottom line, I want to extract each individual link (and sub link) from the main menu and theme them individually.
If you have a theme that supports the output of primary and secondary links in the way you describe (Bartik, the default theme for Drupal 7 does, but it doesn't have the secondary nav below the primary, but rather in the upper right of the header), you can accomplish this by setting the secondary menu to be the same as the main menu. Navigate to admin/build/menu/settings to make this selection.

You can further customize this behavior using the Menu Block module.