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I use layer menus on all of the sites I work on and they work really well in search engines.
I always wonder if using a drop-down menu made of hidden layers is a smart move. One might assume that search engines may not understand that the hidden layers are a part of a menu, and treat them as hidden text. And of course, hidden text is a big no-no.
As long as the "hidden text" serves a real purpose for the user (i.e. a menu of valid, visible links), then I can't see any harm in them.
In my opinion, there is little or no risk at all using this method.