MSIE8 ignoring the .fadeTo directive is apparently tied to using <! DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http:// www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> which puts MSIE into "standards" mode, whereby it doesn't have the actual standard of "opacity" but doesn't admit to having filter: alpha(opacity) either.
List of doctypes that put MSIE 8 into standards mode is over at http://msdn.microsoft.com/en-us/library/ms535242(VS.85).aspx and testing between <!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"> (standards off) and <!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd";> (standards on) would seem to confirm that MSIE 8 believes that disabling features improves standards compliance. I don't have any additional information on where the vertical shift is coming from when MSIE does admit to having opacity capabilities.
