Index: dhtml_menu.css
===================================================================
--- dhtml_menu.css	(revision 108)
+++ dhtml_menu.css	(working copy)
@@ -51,3 +51,13 @@
   list-style-image: url("images/folder-closed-white.png") !important;
 }
 
+/*
+ * Drop-Down menus
+ */
+.drop-down li ul {
+  position:absolute;
+}
+.drop-down li ul li {
+  display:block;
+  background-color:#333;
+}
Index: dhtml_menu.js
===================================================================
--- dhtml_menu.js	(revision 132)
+++ dhtml_menu.js	(working copy)
@@ -29,6 +29,11 @@
     // Sanitize by removing "expanded" on menus already marked "collapsed".
     $('li.dhtml-menu.collapsed.expanded').removeClass('expanded');
 
+    // Prepare Drop-Down menus.
+    $('.drop-down ul.menu li').removeClass('expanded');
+    $('.drop-down ul.menu li').addClass('collapsed');
+    $('.drop-down ul.menu li').addClass('start-collapsed');
+
     /* Relevant only on "open-only" menus:
      * The links of expanded items should be marked for emphasis.
      */
@@ -72,25 +77,35 @@
       var cloned = $('<li class="leaf dhtml-menu-cloned-leaf"></li>');
     }
 
+    /* Same as for settings.nav == 'hover' but for all drop-down menus
+     * in case the general nav is not 'hover'
+     */
+    if (($('.drop-down ul.menu').length > 0) && (settings.nav != 'hover')) {
+      var freeze = false;
+      $('.drop-down ul.menu').mouseenter(function() {freeze = false});
+      $('body').mouseleave(function() {freeze = true});
+    }
+
     /* Add jQuery effects and listeners to all menu items. */
     $('ul.menu li.dhtml-menu:not(.leaf)').each(function() {
       var li = $(this);
       var link = $(this).find('a:first');
       var ul = $(this).find('ul:first');
+      var dropdown = ($(this).parents('.drop-down').length > 0);
 
       // Only work on menus with an actual sub-menu.
       if (link.length && ul.length) {
         /* When using cloned items:
          * - Clone the menu link and mark it as a clone.
          */
-        if (settings.nav == 'clone') {
+        if (settings.nav == 'clone' && !dropdown) {
           link.clone().prependTo(ul).wrap(cloned);
         }
 
         /* When using double-click:
          * - Add a dblclick event handler that allows the normal link action to complete.
          */
-        else if (settings.nav == 'doubleclick') {
+        else if (settings.nav == 'doubleclick' && !dropdown) {
           link.dblclick(function(e) {
             return true;
           });
@@ -102,7 +117,7 @@
          * - In RTL mode, shift the overlay to the right of the text.
          * - @TODO: Explore whether "float:right" in dhtml_menu-rtl.css could solve this.
          */
-        else if (settings.nav == 'bullet') {
+        else if (settings.nav == 'bullet' && !dropdown) {
           li.addClass('dhtml-folder');
           var b = bullet.clone().prependTo(link).click(function(e) {
             Drupal.dhtmlMenu.toggleMenu(li, link, ul);
@@ -122,7 +137,7 @@
         /* When using hover expansion:
          * - Add mouse-hovering events.
          */
-        else if (settings.nav == 'hover') {
+        else if (settings.nav == 'hover' || dropdown) {
           link.mouseenter(function(e) {
               Drupal.dhtmlMenu.switchMenu(li, link, ul, true);
           });
@@ -145,7 +160,7 @@
         /* When using menus that cannot collapse:
          * Toggle the menu normally, but only if the menu is closed.
          */
-        else if (settings.nav == 'open') {
+        else if (settings.nav == 'open' && !dropdown) {
           link.click(function(e) {
             // Don't collapse expanded menus.
             if (li.hasClass('expanded')) {
@@ -159,7 +174,7 @@
         }
 
         // These three options make links simply toggle when clicked.
-        if (settings.nav == 'clone' || settings.nav == 'doubleclick' || settings.nav == 'none') {
+        if ((settings.nav == 'clone' || settings.nav == 'doubleclick' || settings.nav == 'none')  && !dropdown) {
           link.click(function(e) {
             Drupal.dhtmlMenu.toggleMenu(li, link, ul);
             if (settings.effects.remember) {