I've had some dealings with this bug :-)
I don't remember the exact fix but it involved opacity.
I think I applied an opacity of 0.99 to the containing element for the drop down menus (a transparency so small you don't notice it), and a :hover on the same element that reset opacity to 1.0. This bug also pops up if the menu comes up over an element where the overflow property is set to anything other than visible.
This bug can also be fixed by not using the display or visibility properties, instead position the drop down offscreen using something like left: -2000; or top: -2000; and then reset that value to whatever is correct in the :hover rule (this fix doesn't seem to work for nested submenus though).
I'm pretty sure this bug is fixed in the forthcoming Firefox 1.1.
HTH!
Regards,
Rich
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