Internet Explorer 7, Firefox 2, Firefox 3.0.1, Shiretoko 3.1, Opera 9.52, Safari 3.1.2, Konqueror 4.1, Seamonkey 1.x, Seamonkey 2.x, NS 7.2, K-meleon 1.x, Galeon 2.0.4, Epiphany 2.22.3 all pass this test.
This bug has been reported at connect's IE beta feedback as bug 361033.
Update: This bug has been FIXED in Internet Explorer 8 beta 2 (build 6001.18241) released on August 28th 2008. Otherwise, Internet Explorer 8 beta 2 PASSES this specific and particular testcase.