When a container block has a rounded border with overflow:hidden and the content block has a position value other than static, if the content block is bigger than the container block, the content block is shown outside the container. In other words, the content block is clipped the same way as if the container block doesn't have a rounded border. This is in contrast with respect to the W3C spec: "Other effects that clip to the border or padding edge (such as ‘overflow’ other than ‘visible’) also must clip to the curve." (http://www.w3.org/TR/css3-background/#the-border-radius). Test case at: http://jsfiddle.net/YuXfH/
This works correctly for me in Safari 6. What browser are you testing?
I've tested Chrome, both stable and unstable, and Safari 5.1.7. I got wrong info on what version of webkit Chrome has, so I thought Chrome unstable has a bleeding edge version of webkit. I was wrong. I can confirm the latest webkit version solves the problem. Sorry for that.