I can't find a particular way to change how it works (I checked TweakUI too), but you can clear that list via right-click, then properties. TweakUI allows you to set what programs will get into that list though if you don't want a few showing up.
And I personally like the Start Panel quite a bit more then the Start Menu. Puts things you generally want closer to where you are clicking. I got tired of diggin on my desktop for things like My Computer and the Network icons. No, no matter what screens I have up, I Can easially get to them, and even change them to tree view.
I still prefer Expose though to find things. But when I'm on the Wintendo, the Start Panel doesn't do me wrong.