Well, so here's the real deal and most places kinda frown up on it. If you get into an MS/PhD program (i.e. combined), you can check if your MS is awarded after 2 years and if you have the option to leave the program. So, as you can see, often times it's not actually the kind of commitment you think it is and you're more likely to be funded, whether it's through TA or a fellowship.
On the point about applications vs theories, I'll just give you an example project at UMass (I graduated from there, hence the reference). Professor there, David Jensen, applied Machine Learning techniques to help SEC identify stock brokers who were breaking the regulations. Here's the paper: http://kdl.cs.umass.edu/people/jensen/p ... dd05b.html. This seems fairly practical The point is that you can often find research work that is more applied than other work. I'll just say pick your advisor wisely and that'll help you also figure out the school you're more fit to attend.
Finally, as far as picking schools, advice I got was apply in 3s: three that'll probably be a stretch, three that you have a good shot of getting into, and three safety schools. When I applied, I applied to only 1 safety school because I knew I would get in and it was a good school. So, adapt the advice to your circumstance. Also, as I found out grad admissions is a lottery: I got into WashU (ranked 5th in what I'm interested in), but didn't get into UCLA or UCSD (13 and 15 respectively I think), so you always have a shot