Testcase document committed as tests/submitted/issue41.html

i tried ur test case in ie8 and ie7,
and i didn't get an error,
i recorded testing it in ie7 here:
http://screenr.com/71X

The original testcase on speth.bplaced.net has been modified to include a workaround which I suggested in the forum, so it makes sense that it's now working. The committed version should still show the problem in IE8.

alternatively, you can simply modify PIE.htc to update when display is changed. just change line 11 to include an update() call after the propChanged() call.

<PUBLIC:ATTACH EVENT="onpropertychange" FOR="element" ONEVENT="propChanged();update();" />

seemed to work for me.

another possible solution is to force the rendering via javascript

function refresh() {
    if ($.browser.msie) 
        $('selectorToCss3StyledElement').each(function () { this.fireEvent('onmove') });
}

and call this function right after the change of the display property

For istance if you animate a div with jquery and fadeIn / fadeOut

$('selectorToTrigger').hover(
    function () {
        $('selectorToCss3StyledElement').fadeIn();
                refresh();
    },
        function () {
            $('selectorToCss3StyledElement').fadeOut();
                refresh();
        }
);

original code:
http://css3pie.com/forum/viewtopic.php?f=3&t=23&p=98&hilit=display:none#p98

If none of the above fixes work for you, try separating the manipulation of display property away from the element with CSS3Pie applied.

e.g. a simple div wrapper to control the display property and its child having all the CSS3Pie styles.

any way this problem can be solved with an PIE update? what about including the fix from @tysonmalchow ?
@macbeth solution works but i prefer a PIE fix over ie-specific JS code