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You are correct. For now, pending an update, if you want to use Lytebox:

http://www.dolem.com/lytebox/

you will have to force IE 7 compatibility mode for your page(s) that use it by including...

Using the script is a good solution. I'm thinking it may have been updated to work in IE 8 or in some other fashion that also fixed whatever the problem was in IE 8. It is also entirely possible...