Good thinking, but no luck.
I forgot to detail all of the troubleshooting steps that I’ve already tried.
1. Setup an IE only style sheet and set padding to 0 on the #nav ul element.
2. Tried to set the active page button to border-bottom: none.
3. I also tried changing the height of the active page li, but that didn’t work either.
Too bad you can’t set negative padding ;-).
Any other ideas?