Multiple lines of text entered into the RTE, separated by breaks <br /> are not being converted into a multiple bullet point list in IE7. Rather the whole block of multiple lines is indented and assigned one bullet. This makes formatting quite tiresome if you are in the habit of assigning your bullet points after the fact.
It also means if you enter a paragraph of text then start a new line with the intention of beginning a bulleted list, the bullet instead will be applied to the paragraph.
Firefox does not seem to have this problem. If, for example, seven separate lines of text are selected (all separated by breaks) and the ordered or unordered bullet list button is hit, it turns those lines into 7 bullet points.
Forgive me - but this is a very hard bug to describe!