IE Problem Solved!

The site looks Ok on IE now.
After long research and some template changes - none of that helped, I read on this blog something which put me on the road to the solution.
Apparently, the width of a post (essentially a DIV element) is quite limited (in order to fit the template). But whereas FireFox deals with it gracefully, forcing a limit, breaking sentences automatically and adjusting image width to avoid width issues, IE just takes it as it comes and if it can't fit an image in a DIV's width, it breaks the next DIV.

I would have liked to say that what followed was a long binary search to see which post broke the template, but actually I guessed right away it was the birthday post withe the embedded Flash movie. All that was needed was reducing it's width and the IE problem was gone.

And I still remember the early days where IE's D/HTML was handling stuff better then Netscape (way before FireFox).