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What I am trying to do is quite simple, but for some reason, I am unable to get it to work.

A fiddle of code I am playing with is here: http://jsfiddle.net/2vAfP/

What works:

1. When I drag an item into the empty list, the empty list place holder disappears

What doesn't work:

1. When I drag an item from list 1 to list 2, which will result in list 1 being empty, the place holder does not reappear.
2. If a drag an item from list 2 to list 1 and while keeping the mouse down, drag that item from list 1 back to list 2, the place holder does not reappear.

From my debugging, this is due to the list containing more than 0 items (excluding the placeholder) on drop:exit and drag:start.

I am not sure if this is a bug or not, so have not filed a bug report. It seems to me that perhaps drop:exit and drag:start is firing too early, but of course, this could be intended behaviour.

Could someone look at the code and suggest a way to fix it?