Tim,
In working on the maths editor we have noticed that while math can be correctly rendered in the dropdown list in a Multichoice cloze when the dropdown list is selected, when the drop down is not actively selected it appears empty of anything in tokens (while non-tokenized text does appear. )
See, http://moodle.org/mod/forum/discuss.php?d=123806&parent=543396
How does that work?
Wow! you mean maths in dropdows works at all. I am pleasantly surprised 
I guess this counts as a bug, can you file it in the tracker, if you have not already. However, I doubt I will have any time to investigate any time soon. However, if someone can find a fix, I will happily commit it to CVS. (I suggest you try to make the simplest possible test.html page, by doing save as on the page from Moodle, then deleting as much as possible while still demonstrating the problem.)
I guess this counts as a bug, can you file it in the tracker, if you have not already. However, I doubt I will have any time to investigate any time soon. However, if someone can find a fix, I will happily commit it to CVS. (I suggest you try to make the simplest possible test.html page, by doing save as on the page from Moodle, then deleting as much as possible while still demonstrating the problem.)