Line Breaks with TinyMCE Advanced IE vs FF

Atahualpa 3.4.4 on WP 2.8.7, with TinyMCE Advanced plugin.

I installed the Advanced plugin to get around the well-known linebreaks issue (i.e. Press return in editor, line break get stripped out in browser).

So in the TinyMCE Advanced settings, I have the:
Stop removing the <p> and
tags when saving & show them in the HTML Editor ticked on.

However, I have been testing and the line breaks are respected in Firefox 3.5 and Chrome, but not in IE7 or IE8.

Anyone found this? What is the actual solution to this infamous problem? (Keeping in mind id rather not dive into the HTML, as I have several authors who do not want to do this).

Thanks