Unfortunately 2.0RC3 doesn't work well in IE8. I have disabled all plugins, except simple-lightbox, then set the theme to TwentyTwelve, and the issue persisted:
The images are resized to fit the width of the screen, the height may extend far beyond the screen. It is my understanding that the images should be scaled for best fit, meaning that both height and width are scaled down to fit inside the content area.
Here is an example URL: http://swmontanaauctions.com/auctions/consignment-auction/
It works perfectly in other browsers.