I put some effort in making interface.js v1.2 work with jQuery v1.2.x since a migration to jQ UI, unfortunately, is far from being straight forward.
A concrete problem arises from iSlider.js, which uses a .Draggable in the build() method. As 'handle' it uses 'this'. Later on, the jQ core function find() is called with 'this' in line:
var dhe = o.handle ? jQuery(this).find(o.handle) : jQuery(this);
The find() method does not return an appropriate result and execution fails with an error (at least in IE). This is because indexOf() does not work for a DOM object.
Anyway, find() needs to become more robust. I recommend trying to convert a non-string into a jQ object (see attached patch). One could argue if it is a problem of jQ or the caller (e.g. interface.js). However, I don't see a problem in falling back to a standard jQuery if the passed parameter is not a selector string.