I've just done a bit of fiddling and it actually doesn't seems to be the <iframe>
If you look at http://www.darkaudio.co.uk/v2/scroll_test/index.html now you'll see that the top two <div>s now have the problem too and it's only the left <div> which doesn't have the Javascript scroll applied that's ok... so maybe its a CSS or Javascript problem?
The code is below. I'd be grateful if anyone could spot the problem, if not do you know of an alternative script for this? MooTools?