As Shawn says, this problem kind of surprised us. I dug into it this morning and pretty quickly decided the problem wasn't due to the Toolkit code itself. So I poked around in Atlas a bit, and found out the problem's with Sys.UI.PopupBehavior's implementation of show() that HoverMenu (and PopupControl) uses. On IE, show() does something unexpected that causes this problem. It's described briefly by the Atlas team in this post to their forum: http://forums.asp.net/thread/1270112.aspx.
We're really sorry you've hit this problem, but it's not clear what to do on the Toolkit side of things. Using the PopupBehavior is the "right" thing for HoverMenu to be doing here, so I don't think changing that is a good solution for the Toolkit (though maybe it's a good solution for YOU?). I'm optimistic this will be fixed by the next Atlas release and then the Toolkit controls will automatically benefit. (Fingers crossed!)
Thanks for the report and your patience here!!