I stumbled across this thread on elitetrader.com:
http://elitetrader.com/vb/showthread.php?s=&threadid=164903&perpage=6&pagenumber=9
It got IB's attention and they are working on a fix.

On Aug 12, 12:15 am, Eugene Kononov <[email protected]> wrote:
> > Tomorrow I will test this code change to the MarketDepth.java
> > case Update:
>
> Well, the thing is, we don't know if our changes are legitimate, unless we
> have some explanation for the duplicate price levels. I sent an email to API
> support asking them to clarify this.
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