After reading the previous comment about AutoHide not working with Leopard I decided to try DragThing's auto-hiding feature. I love Dragthing for it's custom dock features but I was not as happy with it's implementation of automatically hiding applications as compared to AutoHide.

Today I decided to install AutoHide 1.3.8 and try it for myself. After a few minutes of testing AutoHide seems to be working great with Leopard. Perhaps the previous user who said it did not work "upgraded" to Leopard (as compared to a clean install) and this caused some preference problems. All I can tell you is that I did a clean install on a new Mac Pro and so far it seems to be working fine.

I will report back here if it fails with Leopard but so far so good!