Apparently the issue I was having has been fixed in the Report Viewer 2005 Service Pack 1 from April 2007.
The Microsoft Technician mentioned this:
I tested your issue and it seems that it has already been fixed in the Report Viewer Redistributable SP1. I was able to reproduce the issue on version 8.0.50727.762 of the Report Viewer control and then I tried with 8.0.50727.817 and it worked correctly. Can you go here: http://support.microsoft.com/kb/933137 and download/install the package.
Once that is done, it works as it should! I hope it doesn't create other issues. I have Visual Studio SP1 installed and it didn't install this fix. So keep in mind that even though you have VS2005 SP1 installed, it includes some fixes for the ReportViewer, but it doesn't include all of the fixes in this package and there were some regression bugs introduced with VS2005 SP1.