.ico rendering problem exhibited by Mac OS X pre-Tiger, though still not fixed, is at least nicely sidestepped in Safari 2.0: it uses the 8-bit icon by default. I haven’t conducted any serious testing to see whether it takes the 8-bit icon even in cases where transparency isn’t an issue, but I imagine it would.
Try opening my favicon in a browser window, or in Preview, and you’ll still be met with the ol’ funky transparency handling. Weird. Firefox & Co are still behaving correctly, bless their hearts, but at least my icon doesn’t look like ass to the majority of the Mac-using populace any more.