Robert_Charlton - 8:29 am on Feb 13, 2009 (gmt 0) That said, absolute paths are recommended for the canonical tag.
Regarding the <base> link, the Google Webmaster Central Blog article discusses how the <base> link can be used together with the rel="canonical" if you choose to use relative rather than absolute paths....
...relative paths are recognized as expected with the <link> tag. Also, if you include a <base> link in your document, relative paths will resolve according to the base URL.
That said, absolute paths are recommended for the canonical tag.