Doubletrouble, fat and muscle are different things so you aren't actually turning fat into muscle. When you exercise you generally build muscle first which can make you look bigger and weigh more. As you lose fat the muscles become more visible and you will be slimmer. Whether your muscles get big depends on whether you do heavy weight training or not. If you don't want to bulk up then do low weights and high reps, if you want strength and big muscles then heavy weights and lower reps. So I guess the bulky does go away in that you aren't as big after you lose the fat.
It does depend on your body shape too. I have quite an athletic sprinter type shape so really have no chance of super thin legs and bum, so I aim for super toned and strong instead.