rhundesign

This adaptation is working for me in WP 3.2.1

function restrict_your_post_type_by_your_taxonomy() {
	global $typenow;
	global $wp_query;
	if ($typenow=='your_post_type') {
		$taxonomy = 'your_taxonomy';
		$your_taxonomy_tax = get_taxonomy($taxonomy);
		wp_dropdown_categories(array(
			'show_option_all' => __("Show All {$your_taxonomy_tax->label}"),
			'taxonomy' => $taxonomy,
			'name' => 'your_taxonomy',
			'orderby' => 'name',
			'selected' => $wp_query->query['your_taxonomy'],
			'hierarchical' => true,
			'child_of' => 0,
			'depth' => 2,
			'hide_empty' => false,
		));
	}
}
add_action('restrict_manage_posts','restrict_your_post_type_by_your_taxonomy');

function convert_your_taxonomy_id_to_taxonomy_term_in_query($query) {
	global $pagenow;
	$qv = &$query->query_vars;
	if( $pagenow=='edit.php' && isset($qv['your_taxonomy']) && is_numeric($qv['your_taxonomy']) ) {
		$term = get_term_by('id',$qv['your_taxonomy'],'your_taxonomy');
		$qv['your_taxonomy'] = $term->slug;
	}
}
add_filter('parse_query','convert_your_taxonomy_id_to_taxonomy_term_in_query');

You only have to change “your_post_type” and “your_taxonomy” to your needs.

I have tweaked the second function a bit, as now wordpress passes the variable as your taxonomy name instead of a “term”.