The amount of capital gains distribution (1099DIV box 2a) is being taxed at 25%, not at the capital gains rate of 15%. Is that correct?

You capital gains distribution is taxed at 15%. If you see a 25% increase in tax, it is due to a secondary effect. Examples are, 1) if you receive social security benefits, the amount of your benefit that is taxable depends on how much other income you have. Add cap gains distribution, the amount of your SS that is taxable goes up and your tax goes up.
2) If your income is high enough that you are subject to the Alternative Minimum Tax, then cap gains distributions are still taxed at 15%, but, the cap gain reduces your AMT exclusion, making more of your income subject to the AMT, and your tax goes up.