Yes, I have always used that trick for much the same reason Mark did, and that might be part of why I never had any trouble before SP2. I had playlist.php?fid=<fid>&ext=.m3u and that, in combination with the content-type header, has always worked well enough before. Post-SP2, though, neither of those things work with IE.

I've found another solution, though it doesn't really fix the problem (if there's a fix for the problem at all...it just might be new unavoidable IE behavior). Instead of making .m3u version of my PHP scripts and registering the .m3u extension to be parsed by PHP (which I didn't like), I decided to use mod_rewrite module in Apache to translate requests for <fid>.m3u to playlist.php?fid=<fid>. Works like a charm.

Stupid IE.