This is a mystery to me. Why would a popup menu stop before colliding with the dock? Shouldn’t it layer above the dock?
And if it isn’t going to layer over the dock, shouldn’t the menu at least extend upwards? ((It usually does. I don’t know what’s different about this situation.)) Why should I need to deal with menu items three at a time on a monitor with a resolution of 1680×1050?
Not sure if this happened in Tiger or not.

As far as I know, this started in Mac OS X 10.0. The Mac OS X Public Beta before that was very happy to have a menu over the Dock. I’d be very interested to learn the rationale behind it.