Workaround for IE7
I just started reading this thread today. It doesn't look like there's a solution here. The ie7 culprit seems to be setting position: absolute, or position: relative on a div containing the webassist generated menu. I tried two levels of divs trying to isolate the menu and still the hover activated bit of menu would flow under anything else down the page when using css position rules.
Had to remove any css position rules from the div where my generated menu lived. Then position using negative margins. I have a wrapper div around the div that contains the generated menu. I then position the menu from there as necessary. As long as "position:" rules do not target the webassit menu piece, this works.