I think IE is doing the right thing here.

All the content should be wrapped in the block level element.

It should be:

........... <div>     Hello World </div> <div></div> <div>     Hello World </div> <div>     <img src="logo.gif"> </div>	........... <p>     Hello World </p> <p></p> <p>     Hello World </p> <p>     <img src="logo.gif"> </p>

----------

However the following code will have formatting problems when you have a large content.

<br/>
    Hello World
<br/>
<br/>
 Hello World
<br/>
<img src="logo.gif">
<br/>