Same here. CSS background images do not work under IE (I'm using IE 7).
A closer look revealed that in IE, the browser is trying to grab background images with requests like:
GET /-5iKker74/YahooFullView/http/3A//ic.apps.yahoo.com/v1/cache/public/i7O6LuSyoa5YY3ya2kGbNBObiTRoVpHZALIEej2a1K.oczlg2r24enBIp1Q9ErKBtcQ-
(...and they fail)
Yet on Firefox, they look like:
GET
http://ic.apps.yahoo.com/v1/cache/public/i...nBIp1Q9ErKBtcQ-So my guess is that CAJA failed to convert the first part of the image URLs (i.e. "http\\3A//" part into "http://", NOT "http/3A//").
Would be really great if this is fixed asap.