Huh. According to the rules, the "this mirror" text should define the height of the gray background. I don't know what might be problematic for NS 7.02...
Commiting a sin.. file attached.
I have also experienced such display in case both of the DIVs had modified positions [ie. relative or absolute]. I also had a different positioning version, whith only one of the layers positioned relatively, but then there were strange things when the text wrapped.
I'll look for some more solutions, but it will take some time [I have other things to do, so I'll come back to this in a few days, probably]...
Goba