Does Knockout support bi-directional binding to styles?

may help you . It would make recursion possible (which would mean parsers would need to be able to recover from it) Multiple rule-sets can use the same selector, so which one would apply? Or would all of them?
You can achieve what you want with:

<img … class="awesome-image super-awesome-image">

.awesome-image,
.super-awesome-image {
  border: 1px #000 solid;
  margin: 2px;
}

.super-awesome-image {
  padding: 2px; 
}

fixed the issue. Will look into that further You can think of the update function of a custom binding like a computed observable (Knockout does use computed observables to track dependencies when the bindings on an element are executed). So, in your custom binding you are not grabbing a dependency to the observable that you are bound against, because your code is being executed asynchronously.
In your update, you would probably want to do something like:

update: function(element, valueAccessor) {
    //just grab dependency
    ko.utils.unwrapObservable(valueAccessor());

    $(element).fadeOut(700, function() {
       ko.bindingHandlers.html.update(element, valueAccessor);           
       $(element).fadeIn(700);
    });        
}

may help you . You can't do this without a ViewModel but you can do this with computed variables:

//In your view model
this.showFormElement = ko.computed(function(){
    if(this.checkboxValueiswhatIwant()){
        return true;
    }
    return false;
}, this);

<form [id, classes, etc..]>
    <input type="checkbox" data-bind="checked: checkboxValueiswhatIwant" />
    <input type="input" data-bind="visible: showFormElement" />
</form>

hope this fix your issue Here's pure XAML solution:
Collect all controls on which the text block depends in an array and set it as data context:

<Image x:Name="image1"/>
<Image x:Name="image2"/>
<TextBlock Style="{StaticResource movingTextBlocksStyle}">
    <TextBlock.DataContext>
        <x:Array Type="system:Object">
            <x:Reference>image1</x:Reference>
            <x:Reference>image2</x:Reference>
        </x:Array>
    </TextBlock.DataContext>
</TextBlock>

<DataTrigger Binding="{Binding [0].IsMouseOver}" Value="True">...</DataTrigger>
...
<DataTrigger Binding="{Binding [1].IsMouseOver}" Value="True">...</DataTrigger>