It looks like that toy missed an important workaround. For IE6 and IE7 name and type of the form's elements are readonly, thus a cloned form's element does not support an increment or a change of his name. There are a couple of workarounds for this bug, but I did not see any of them in that cloner.js
You just need to delve deeper into the code First of all, all data submitted by the form is properly structured, no matter whether you use nested clones or not. Try using complex nesting using example at http://niebiarz.eu/free/cloner_1_0.php?nesting_targets_ex and submit the form - IE6, IE7 and IE8 all show properly structured tree reflecting exactly the same thing you created in the form.
There is one thing with the NAME attribute in IE6 and IE7 - you cannot change it after the element has been created and you cannot create a new element having its NAME attribute, unless this new element has its ID attribute whose value is the same as that of the NAME attribute. What the Cloner does it browses all nodes of a pattern in search of NAME attributes and wherever it finds them it adds proper suffixes to them and also creates an ID attribute (having the value identical to the value of the NAME attribute) for each such element.
I tested the Cloner using IE6 and IE7 trying to get cloned elements using document.getElementsByName method and they were all there. It works fine under all browsers