If you generate the menu programmatically, you can add the style and onmouseover/onmouseout attributes when creating each MenuItem, e.g.:
menuItem.Attributes["style"] = "color: red;";
menuItem.Attributes["onmouseover"] = "javascript:Highlight(this);";
Alternatively, try adding those attributes in the markup, IntelliSense won't tell you that they work, but they usually do (I haven't tested it specifically with MenuItems):
<asp:menuitem navigateurl="Home.aspx"
text="Home"
imageurl="Images\Home.gif"
popoutimageurl="Images\Popout.jpg"
tooltip="Home"
style="color: red;" onmouseover="Highlight(this);" onmouseout="Unhighlight(this);"/>
You might have some luck with CSS Friendly Adapters.
Of course you can create an inherited class and re-work the rendering routines...