Calebrot,
You might try this way:
1 - Start IconPackager > Settings > verify that you have "Apply package icons to Internet Explorer Favorites" selected > click "Apply" if needed > click "OK" to close and save.
2 - Start IconPackager > Tools > Restore all Icons > click "Yes" to confirm > click "OK" to apply.
2 - Start IconPackager again > Tools > Rebuild Icon Cache > click "Yes" to confirm > click "OK" to apply.
3 - Navigate to the "Favorites" folder for your account > open the folder > minimize to the taskbar.
4 - Start IconPackager > select the theme you want to apply > click the "Apply" button to apply > wait a few seconds for settings to take place.
5 - Restore the Favorites folder from minimized in taskbar to check for changes.
Note - I just tested this procedure with Mormegil's "Utopia (Canvas)" icon package, so it does work correctly.
I hope this helps you.