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I noticed that when using tabbed browsing in NS7, favicon.ico is requested from the server whenever focus is given to the tab that includes that icon. This happens regardless of browser, proxy, or ico file cache settings, too. So, I suspect it is the 'tab manager' issuing the requests, and the tab manager is not working with the browser cache. Nor is it really aware of the <shortcut icon> tag in the page being displayed... In other words, they are processing the icon handling at the wrong place in the code (not that I know where the right place would be)...
I have custom icons on several sites, and in order to prevent 404 errors on favicon.ico (which I removed in favor of the custom icon), I had to redirect favicon.ico to custom.ico. Even using an external permanent (301) redirect, NS7 keeps requesting favicon.ico whenever the tab is given focus. Because of that, I changed the redirect to a simple internal "file" redirect.
Jim