This is an apparent problem to do with tour size and I.E 7.0. Sorting out these issues has only just begun because of the fact I.E 7.0 has just been released.

I tried your link again just now and it worked OK with I.E 7.0 panning was nice and smooth based on my quite powerful computer.

Sticking with the simple rule of resizing your image to that of 2 1/2 times the viewing window height will help a lot with older slower computers or those with dial up connections.

Regards, Smooth