The answer below is now mostly obsolete, because the problem has been fixed as of jQuery 1.6.2, which has been out for a while now.
If you're having this problem, just upgrade jQuery to the newest available version.
Edit:
There's something wrong with jQuery!
If I switch to 1.6.1 hosted from Google, it still breaks: http://jsbin.com/epata3/3
If I move the script to inside the head, it works: http://jsbin.com/epata3/4
And you're right, everything works as expected with 1.6.0: http://jsbin.com/epata3/7
???
There's something wrong with your jQuery include.
This simple test case breaks in IE8 in exactly the same way:
See in IE8: http://jsbin.com/exomi4
The background flashes red, then turns white.
<!DOCTYPE html>
<html>
<head>
<meta http-equiv="Content-Type" content="text/html; charset=utf-8" />
<title></title>
<style>
body {
background-color: red;
}
</style>
</head>
<body>
<script type="text/javascript" src="http://www.mojalbum.com/js.php?f=core/jquery_1.6.1.js,&c=v2"></script>
</body>
</html>
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