I don't have a good description of theory, so here I intend it to mean more or less: Any idea that partially explains something and is more or less verified.
Such as scientific theories and models that no proof exist but hold enough such that the theory(idea) is still useful.
It is a stronger version of "hypothesis", theories are hypothesis that were at least thought through.
The main goal of most thinking is to produce theories, not to actually proof them, but to produce hypothesis and casually verify them.
Theories are reliable enough to guide you through some decision but easy enough to produce on a daily basis, no proof needed.
I believe that such a thing as "raw intelligence"(g-factor) do exists and I think it is highly correlated with what people actually perceive as being smart.
What people actually perceives as being smart, is the number of theories an individual have multiplied by how well they use those theories to work on problems.
As such while there is no evidence that you can enhance your "raw intelligence", you can always expand on your set of theories.
"in theory X, but in practice Y"
This is a common sentence to hear, this is essentially a clash of theories, not practice vs theory, it is a clash of a well tested theory aka the practice vs a not so well tested theory.
If a theory doesn't match reality, then it is simply a bad theory for the set of "reality" that is being probed, it may still be an useful theory, but it is a bad theory.