Steps to reproduce:
Actual results in IE 8 RC1 build 18372:
Note: hover the mouse cursor over the blue border of the clickable W3C image-buttons above in IE 8 RC1 build 18372 actually makes the link reactive, applying the :hover class.
NS 7.0, NS 7.1, NS 7.2, Firefox 1.5.x, Firefox 188.8.131.52, Firefox 3, Opera 9.63, Safari 2.0.4, Safari 3.0.4, Konqueror 3.5.5, Konqueror 4.1.3, Seamonkey 1.x, Seamonkey 2.x, K-meleon 1.x all pass this test.
This bug has been reported at connect's IE beta feedback as bug 411772.
Update: this bug has been FIXED in Internet Explorer 8 final release build 6001.18702 released on March 19th 2009. Otherwise, Internet Explorer 8 final release build 6001.18702 PASSES this specific and particular testcase.