Not sure what the 'theme' type in this piece of code supposed to convey, but there is no such type documented for Drupal 7, so it will just fall back to the default:
drupal_add_css($editor['library path'] . '/markitup/skins/' . $theme . '/style.css', 'theme');
The theme type meant a distinct thing in Drupal 6, not anymore in Drupal 7.