A couple of months ago I discovered the joys of an Internet Explorer bug revolving around HTTP.. If a HTTP redirect is returned from a server but the Location: header is not in the same TCP packet, Internet Explorer would have some serious issues. This seems to affect MSIE6, MSIE7, & MSIE8. This suggests some poor separation of the network layers in Windows & IE, but it also highlighted the strangeness of SimpleHTTPServer's implementation, which is used by paste's default server.
Every time it sends a header, it flushes the buffer.. the end result is that you often get one TCP packet for each header, and then the data afterwards.. obviously this isn't the most efficient use of the network. Headers and data should be buffered before sending.
The solution was to switch to using FLUP & FastCGI for both the testing and production environments. We're using Nginx, and this combination proved very robust. Wireshark certainly showed much nicer results.