In my tests some versions of IE7 did not handle display property correctly. It would still show some parts of the drop-down menu even if it was closed at that moment. I realize that some users might want to utilize display to dynamically manipulate drop-down menus. In that case please use the following override code snippet in your theme:

ul.dropdown ul { display: none; visibility: visible; }

ul.dropdown li:hover > ul { display: block; }

Now you will be able to manipulate your drop-downs with JavaScript (use animations, etc.). I will further investigate this issue and move this code to the base file as soon as I feel comfortable with the situation.