SelectElement.value should return the value which would be submitted, if the user had clicked the submit button

SUCCESS! Your browser passes this test.

FAILURE! Your browser fails this test.

HTML 4.01, Section 17.6.1 Pre-selected options spec says that if no value attribute is provided, then the value of an option is its content.
If this [value] attribute is not set, the initial value is set to the contents of the OPTION element.

HTML 2.0, Section 8.1.3.1 Option spec says that if no value attribute is provided, then the value of an option is its content.
The field value defaults to the content of the <OPTION> element. The content of the <OPTION> element is presented to the user to represent the option. It is used as a returned value if the VALUE attribute is not present.

DOM 1 HTML (2nd edition), Interface HTMLSelectElement, value attribute states
value of type DOMString
The current form control value.

DOM 2 HTML, Interface HTMLSelectElement, value attribute states
value of type DOMString
The current form control value (i.e. the value of the currently selected option), if multiple options are selected this is the value of the first selected option.

Credit must go to Kyle Mulin explaining this bug in IE Blog on January 20, 2006 for stating "SelectElement.value returns whatever value would be submitted, if the user had clicked the submit button." and for providing an initial, working testcase along with useful explanations, details.

MSDN Reference:
VALUE Attribute (OPTION, SELECT)

Firefox 1.x, Firefox 2.x, Firefox 3.0.5, Opera 9.63, Safari 2, Safari 3.2, Konqueror 4.1.2, Seamonkey 1.x, Seamonkey 2.x, NS 7.2, K-meleon 1.x, Galeon 2, Epiphany 2 all pass this test.

This bug has been reported at connect's IE beta feedback as bug 389742. This bug has been closed by the IE team and will not be fixed for the release of IE 8 final.

Valid HTML 4.01!