It looks like IE7 and IE8’s PNG transparency isn’t quite perfect. If you use a transparent PNG and a IE filter, then it looks like you’ll loose your alpha transparency.
Example:
CSS:
#content h2 {background:url('../images/bkg.png') repeat-y transparent;} #ie #content h2 {filter: dropshadow(color=#fff, offx=0, offy=1);}
Result: 
Once I took off the filter, the PNG works as expected.
The Work Around:
If you must use MS filters, then just specify the standard IE6 PNG fix filter at the end of your CSS Rule.
#ie #content h2 {filter: dropshadow(color=#fff, offx=0, offy=1); filter: progid:DXImageTransform.Microsoft.AlphaImageLoader(src="../images/bkg.png",sizingMethod='scale');}
PS: The dropshadow filter reeks havoc on your text anti-aliasing. Try to avoid it.
