Transparent borders still aren't working in IE.
(tested in IE7b2, version 7.0.5335.5)

Note: This bug has been fixed in the current release of IE7beta, version 7.0.5346.5. If you still don't see transparent borders, download the latest release here: http://www.microsoft.com/ie.

In the following two examples, you can see that although the border is defined to have a transparent colour, it really just takes on the colour of the font. 

div#one{
	border:5px dashed transparent;
	background-color:rgb(255,255,224);
	color:black;
}

div#two{
	border:5px dashed transparent;
	background-color:rgb(224,224,224);
	color:blue;
}

So I thought, what if I set the font colour to transparent as well (even though it's not allowed in CSS2), but clearly, that just defaults to black[1]. 

div#three{
	border:5px dashed transparent;
	background-color:rgb(224,255,255);
	color:transparent;
}

[1] In other browsers, the font will then take the colour of the font as set for the rest of the document, in this case rgb(150,0,0).