I just updated to IE 8, and it seems once again much improved from the previous version. There is now a Favorites Bar, just like the Bookmarks Toolbar in FF, which puts links right at the top of the browser. The menus are at the RHS of the same bar that holds the window tabs, so the browser is compact. Still no way I know of to modify the light blue background, but I've just started working with it.
Performance-wise, it's about as fast as FF (maybe slightly slower), compatible with MS only sites, and FINALLY displays most HTML correctly, including this site.
Oh, and most importantly, XMarks (used to be Foxmarks) now works with IE, so that's one less hurdle.