What you want is the missing "combobox" element. HTML doesn't have one. One of the
most popular articles on my site experiments with creating one. It works great in FireFox, but IE's z-index bug cannot be avoided.
Thank you for posting this publically - a refreshing change.
I think a CSS-based "popup" DIV, populated with AJAX as a result of typing into a textbox, might be your only choice.