I'm giving this thread a shameless bump, because i'm having the same issue with my long forms. It's a bit surprising that this isn't fixed after more than a year.

I've tried digging into the CSS files of the editor (because i think it's CSS related). Firefox displays the form editor correctly actually, but IE7 (and possible earlier versions) are giving trouble with long forms in the backend editor.

Has anyone tried to solve this or actually found the culprit that's causing this...?

Edit:
I've found a temporary solution:
In sapphire\css\FieldEditor.css, uncomment overflow-y:scroll at:

And in the same file, comment out position:relative at:

Not the best solution there is, it adds a scroll bar to the editable fieldlist which expands and contracts correctly in IE7. Firefox works like it's supposed to, no changes there i've seen this far with this solution.

I hope this helps some people. If anyone finds a better solution, don't hesitate and post it here please!