I don't know a good solution for you. It needs a fixed width because the same dimension is used to offset the position from its parent. For example if the parent is 160px wide then you mouse over it the child is positioned 160px offset so it lines up to the left of the parent. 100% width will make an element use up all the width of its containing element.
In my opinion these dynamic flyout menus are very web 1.0, they are not user friendly if they go more than 2 levels deep because it becomes difficult to mouse your way down to the deeper pages. Also if the site is very large then menu is rendering a lot of hidden markup that makes the page bigger whereas some of the other skins that use a treeview for the vertical menu are better because the populate on demand instead of rendering the markup for every menu item.
So, in short the subblue skin is not my favorite for making a new modern skin.