You won't really be able to do it in IE8 without adding extra mark up as it doesn't understand last-child.
You could add an inner div and then do this which should work in IE8+ and will cater for 1 or more paragraphs as required.
Code:
<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Strict//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-strict.dtd">
<html xmlns="http://www.w3.org/1999/xhtml">
<head>
<meta http-equiv="Content-Type" content="text/html; charset=utf-8" />
<title>Untitled Document</title>
<style>
p {
margin:0 0 1em
}
blockquote {
width: 40%;
font-family: Georgia, "Times New Roman", Times, serif;
font-style: italic;
font-size:120%;
line-height:1.35;
position:relative;
padding-left:3em;
padding-right:3em;
}
blockquote.lft {
float:left;
}
blockquote div:before, blockquote div:after {
content: "\201C";
font-size: 300%;
font-weight: bold;
color:#FE9D00;
line-height:0;
vertical-align:bottom;
margin-left:-.2em;
padding-right: 10px;
}
blockquote div, blockquote p {
display:inline
}
blockquote p:before {
content:" ";
display:block;
margin:1em 0 0
}
blockquote p:first-child:before {
content:"";
display:inline;
margin:0
}
blockquote div:after {
content: "\201D";
margin:0;
}
</style>
</head>
<body>
<blockquote class="lft" >
<div>
<p>Vampires are rumoured to rather drink blood than beer. </p>
<p>Some phrase that is long enough to wrap for at least
two lines and then have the quote at the END of the
last line but not off below or by itself. </p>
</div>
</blockquote>
</body>
</html>
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