My system info:

Configured with: /home/portage/portage/gcc-3.4.2-r2/work/gcc-3.4.2/configure
--enable-version-specific-runtime-libs --prefix=/usr
--bindir=/usr/i686-pc-linux-gnu/gcc-bin/3.4
--includedir=/usr/lib/gcc/i686-pc-linux-gnu/3.4.2/include
--datadir=/usr/share/gcc-data/i686-pc-linux-gnu/3.4
--mandir=/usr/share/gcc-data/i686-pc-linux-gnu/3.4/man
--infodir=/usr/share/gcc-data/i686-pc-linux-gnu/3.4/info
--with-gxx-include-dir=/usr/lib/gcc/i686-pc-linux-gnu/3.4.2/include/g++-v3
--host=i686-pc-linux-gnu --enable-nls --without-included-gettext
--enable-__cxa_atexit --enable-clocale=gnu --enable-shared --with-system-zlib
--disable-checking --disable-werror --disable-libunwind-exceptions --with-gnu-ld
--enable-threads=posix --disable-multilib --disable-libgcj --enable-languages=c,c++
Thread model: posix
gcc version 3.4.2  (Gentoo Linux 3.4.2-r2, ssp-3.4.1-1, pie-8.7.6.5)

The following code failes to compile (compiles with "g++ -o blah blah.cpp"):

#include <string>
#include <set>
 
template<typename T>
struct other_sort : public std::binary_function<T, T, bool>
{
    bool operator()(const T &lhs, const T &rhs) const { return lhs < rhs; }
};
 
// Works just fine
void f(const std::set<std::string, other_sort<std::string> > &in =
             std::set<std::string, other_sort<std::string> >())
{
}
 
struct test1
{
    // Parser error
    void f(const std::set<std::string, other_sort<std::string> > &in =
                 std::set<std::string, other_sort<std::string> >()) const
    {
    }
 
    // Works just fine.
    void g(const std::set<std::string, other_sort<std::string> > &in) const
    {
    }
};
 
struct test2
{
    typedef other_sort<std::string> sort_td;
 
    // Parser error
    void f(const std::set<std::string, sort_td> &in =
                 std::set<std::string, sort_td>()) const
    {
    }
 
    // Works just fine.
    void g(const std::set<std::string, sort_td> &in) const
    {
    }
};
 
struct test3
{
    typedef std::set<std::string, other_sort<std::string> > set_td;
 
    // Works just fine.
    void f(const set_td &in = set_td()) const
    {
    }
 
    // Works just fine.
    void g(const set_td &in) const
    {
    }
};
 
int main()
{
        test1 x;
        x.f();
        test2 y;
        y.f();
        test3 z;
        z.f();
        return 0;
}

With the following errors:

blah.cpp:20: error: expected `,' or `...' before '>' token
blah.cpp:20: error: missing `>' to terminate the template argument list
blah.cpp:20: error: template argument 1 is invalid
blah.cpp:20: error: template argument 2 is invalid
blah.cpp:20: error: template argument 3 is invalid
blah.cpp:36: error: expected `,' or `...' before '>' token
blah.cpp:36: error: missing `>' to terminate the template argument list
blah.cpp:36: error: template argument 1 is invalid
blah.cpp:36: error: template argument 2 is invalid
blah.cpp:36: error: template argument 3 is invalid
blah.cpp: In function `int main()':
blah.cpp:64: error: no matching function for call to `test1::f()'
blah.cpp:21: note: candidates are: void test1::f(const std::set<std::string,
other_sort<std::string>, std::allocator<std::string> >&,
other_sort<std::string>) const
blah.cpp:66: error: no matching function for call to `test2::f()'
blah.cpp:37: note: candidates are: void test2::f(const std::set<std::string,
other_sort<std::string>, std::allocator<std::string> >&,
other_sort<std::string>) const

I can post the assembly code if you REALLY want, however I've tried this with
gcc 3.3.4 and gcc 3.4.2, and all the code above is using all the standard STL
that comes with those distributions, without modification.

As you can see from the above comments, if I typedef the set, it works fine.