OK -- Found the problem!
In the previous release I had attempted (erratic behavior at best) to set the editor background styles using a javascript routine (activated in editor.aspx file using <body onload="BLOCKED SCRIPTsetbkg()"> as follows:
function setbkg(){
var editor1=document.getElementById('<%=Editor1.ClientID%>');
var editdoc = editor1.GetDocument();
editdoc.body.style.backgroundColor = document.Form1.bkgcolor.value;
editdoc.body.style.backgroundImage = document.Form1.bkgimage.value;
}
This will not work in 4007 and in fact "hangs" the browser!
The fix will (most likely) make use of the new Editor.EditorBodyStyle Property available in 4007.