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I just read that the problem only happens when an absolute URL is used for the path to the image. The obvious work-around then is only to use relative paths for BOTH the preload and the mouseover. This may be a bit tricky to notice if your preload function uses an array, but it should be doable by dissecting the code just a bit.
I haven't had a chance to check out this explanation and fix, however, and I'm not likely to get around to it for a while. I've got to fire up a nice, slow dial-up account in order to be sure of what I'm seeing.
Does this explanation line up with what other members are experiencing?