Re: The sniffing happens on the server
The important thing, though, is that they have a class called "Grade X". Browsers which have been thoroughly tested and proven to support advanced features are Grade A, and browsers which have been tested and proven not to support advanced features are Grade C. Everything else is Grade X, and Grade X browsers are assumed to have the same or more advanced capabilities than Grade A -- generally, they assume that an unknown UA string represents a new version or a major browser, or a new browser embedding a major rendering engine. Thus, instead of a whitelist of "known good" browsers, they have a blacklist of "known bad" and assume that anything else can handle advanced features.
Except that strategy has the known drawback of producing lower revenues and higher trouble ticket counts. So I guess it depends on your goals.
When yahoo's users get browser errors - it doesn't cost them money directly. You can't correlate browser errors with lost revenues directly like you can on an eCommerce site. So while I agree with you in principle, reality has reared its ugly head in some instances and pragmatics won out.
