WowAce

This might be happening on other clients but I've only tested Cataclysm Classic.

Any dropdown menu that has a 2nd level (Friends/Guild with more than 25 entries) All Alts > Delete > etc

Only the first 8 items of the level 2 menu draw correctly the rest show as blanks / non-interactable.

There are no Lua errors so this is either a Blizzard quirk with dropdown menus recently introduced or some logic bug.

Not sure if this provides some kind of clue but it appears that Level 2 menus are limited to the starting value of UIDROPDOWNMENU_MAXBUTTONS (8)

The dropdown menu system is getting a big overhaul in just a few days so expect more work there regardless :P

Very interesting.  I had a report of this once before a couple years ago but was never able to reproduce it.  The issue does not appear to happen in Retail.  I am unable to check Classic as I don't belong to a big enough guild there.  I can reproduce the issue in Cataclysm Classic.  It's looks like a bug on the Blizzard side to me.  The menu is built simply by using  UIDropDownMenu_AddButton(info, level).  Like you mentioned above it always happens after the 8th button.  It also appears to always draw 4 blank buttons which are not truly blank but appear that way in the UI before resuming drawing buttons.  With respect to the 8th button the default base template blizzard uses specifically defines 8 buttons, but you should be able to add to that xml specification without a problem.  I have looked through the code again and don't see anything obviously wrong.  I am leaning towards it being a Blizzard issue.