>      In order for the markup to validate correcly I have the sub-menu 
> items as a ul inside the main li: ...

>      This produces valid markup but causes IE to insert that gap.
> 
>      If I remove the containing <li> ...
> 
>      IE renders it perfectly but validation fails.
> 
>      Any ideas?

I haven't tested it right now, but you might try adding:

margin:0;
padding:0;

to the submenu's ul & li. This could possibly make IE render things
correctly.

Tobias

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