Technically speaking, this may not be a bug, since the BACKGROUND attribute is not standard and has an undefined effect. But Netscape's behavior makes little sense.

It can be hacked-around by enclosing the table in another table, and using a transparent GIF as the background for the inner table.

Some people have suggested using BACKGROUND="" instead of a transparent GIF, but I recommend against that. It's nonsensical HTML, which could produce unpredictable results in some browsers. Most browsers will resolve an empty URL of "" to mean the index file in the current directory (usually "index.html"), so the browser may try to load an HTML document and use it as an image. Even using a nonexistent image file would be preferable.