Through the power of SO my question was finally answered! I tried everything the OP in the below link tried and more over the last two days. Somehow I didn't see this SO thread (I wasn't using search terms 'divider', methinks).
What worked for me was to have the no window overlay property set to null. I see that setting the window color may work on some higher version of android (4.2.x+) as well, so I decided to set both. Here is the SO link with the solution(s) to this nasty feature (bug?): link
My final values-v11/themes.xml -
<?xml version="1.0" encoding="utf-8"?>
<resources xmlns:android="http://schemas.android.com/apk/res/android">
<!-- Application theme. -->
<style name="ActionTheme" parent="@style/Theme.AppCompat.Light">
<item name="android:actionBarStyle">@style/ActionBarStyle</item>
<item name="android:windowActionBar">true</item>
<item name="android:windowBackground">@android:color/white</item>
<item name="android:windowContentOverlay">@null</item>
</style>
<style name="ActionBarStyle" parent="@style/Widget.AppCompat.ActionBar">
<item name="android:displayOptions"></item>
<item name="android:background">@drawable/header_style</item>
<item name="android:titleTextStyle">@style/ActionBarTitleText</item>
<item name="android:layout_height">wrap_content</item>
<item name="android:layout_width">wrap_content</item>
<item name="android:height">70dp</item>
</style>
<style name="ActionBarTitleText" parent="@style/TextAppearance.AppCompat.Widget.ActionBar.Title">
<item name="android:textColor">@color/color_dark_blue</item>
</style>
</resources>