I am having a problem with triggering focusout event with the new jQuery 1.4.3. As of right now, I am not really sure why this is happening and the 1.4.3 bugs are not really out.
This bug is only affecting the inline validation, your older site validations will still work when the user submit the form.
I will probably land a patch today, if you are using the validation engine stick with 1.4.2 or change liveEvent to false when you are instancing the plugin.
Update: The problem is only occurring in Firefox, it seems like this is a jQuery bug, but I am not sure right now, I will have to investigate more later today..