Hello,
Can you please precise these details in order to better answer you, please ?
"Can this be achieved from the category on 2levels module or is it only from the top Hikashop/joomla menu system."
Did you mean that you want have the same display than this page but inside your module on 2 levels categories AND with Variants products ?
"Also the images as shown do not open or expand when clicked on? ideas?" Do you mean that the thumbnail didn't display in a popup ? If yes, can you check your Image popup mode option are on "Shadowbox(external).
You will find this option, from Main HikaShop Configuration, in Display tab, and in GENERAL DISPLAY OPTIONS part.
Awaiting news from you to progress on your subject.
Regards