Thanks for the feedback!
I made a few minor adjustments to the menu demo at the end of last week, so make sure you're testing with the latest version and make sure your browser is not getting some of the files from cache.
In your screen-shots I notice that the font-size of the labels is different from the font-size of the items. This implies that the appropriate styles are not being applied to the label elements. Those styles are applied dynamically in xmStyleIterator() (file: xmenu3.js). Does IE5/Mac support making assignments to the className property of an element? Try some alert() statements in xmStyleIterator() to try to see what's going on - for example is box.xmLevel defined?
BTW, the menu demo is now included in the Hawk download zip.