+1  A: 

Flash acts strange sometimes when movie clips, textboxes etc are not on whole pixels. Make sure the textbox has integers for it's coordinates. If it is in any movie clips, make sure those movie clips have integers for coordinates too.

The other option would be to fudge around with the anti-aliasing features in Flash, but that's always a hit-or-miss situation.

Goose Bumper
This led me to the solution which was I was rotating the text field by 0.1 deg and that was causing the weird drop. I can't tell if its directly related to the 0.1deg rotation or the fact that rotating it by 0.1deg causes its width to no longer be an integer :)
Shizam
Brilliant. Flash is great, but it has a few quirks :)
Goose Bumper