I had an issue today where IE7 wasn’t applying opacity to images, even with the filter:alpha(opacity) hack (as CSS3 opacity isn’t supported).
Turns out I’d disabled something a long while ago, and after a bit of hunting I found what I needed to enable. This probably won’t affect most people as it’s enabled by default – just affecting those with a little bit of knowledge who try to be safe, but don’t really know what they’re doing :-/
Tools → Internet Options → Security → Custom Level → ActiveX Controls and Plugins: Binary and Script Behaviours. This option needs to be enabled to allow the filter:alpha(opacity=xx) hack to work.