IE6 & 7 don't support base64 encoded images.
IE8 does, but if the element is enhanced by css3pie the background disappears.
I'm pretty sure VML doesn't support base64, so this cannot be fixed, but thought I'd mention it in case you know any tricks.
Failing that, maybe it should throw an error.
Does VML support MHTML urls? If so, that might be an avenue of attack.
A recent (2011) "security" update by microsoft disabled MHTML support as an alternative to base64 data uri.