If it works in FireFox with the same UserAgent, then there must be something else with the Palm OS that is causing it...  Perhaps, your useragent is not what you think it is.  The fact that it is rendering downlevel in firefox, kind of rules out any issues with js for the palm to render downlevel.

When I try your useragent and spmenucaps, firefox tries to render uplevel.  It doesn't show any sub-menus cause the useragent is stating that it is IE and it is failing in the javascript.

function spm_browserType()
{
 if (m_spm_sBrowser == null)
 {
  var agt=navigator.userAgent.toLowerCase();

  if (agt.toLowerCase().indexOf('konqueror') != -1)
   m_spm_sBrowser = 'kq';
  else if (agt.toLowerCase().indexOf('opera') != -1)
   m_spm_sBrowser = 'op';
  else if (agt.toLowerCase().indexOf('netscape') != -1)
   m_spm_sBrowser = 'ns';
  else if (agt.toLowerCase().indexOf('msie') != -1)
   m_spm_sBrowser = 'ie';
  else if (agt.toLowerCase().indexOf('safari') != -1)
   m_spm_sBrowser = 'safari';
  
  if (m_spm_sBrowser == null)
   m_spm_sBrowser = 'mo'; 
 }
 //window.status = m_spm_sBrowser;
 return m_spm_sBrowser;
}

Please try excluding the PalmOS from uplevel rendering.

<functionality nm="UpLevel" desc="Renders Uplevel">
  <supports>
   <browser nm="IE" minversion="4" />
   <browser nm="Netscape" minversion="5" />
   <browser nm="Gecko" minversion="1" />
   <browser nm="Opera" minversion="7" />
   <browser contains="Konqueror" />
   <browser contains="Safari" />
   <browser contains="FireFox" />
   <browser contains="Camino" />
  </supports>
  <excludes>
   <browser contains="PalmOS" />
  </excludes>
 </functionality>