Sortable handle outside of list

Hey,
I'm trying to create a sortable list that is sorted using handles that
are positioned outside of list.
I have set up a demo here: http://lightsites.net/sorting.html
I found the following ticket which seems to indicate that it should
work as of 1.5.1: http://dev.jqueryui.com/ticket/3022
Am I doing something wrong or is this a bug in the library?
Thank,
Scott