Okay, if I make a shape and apply a base shape key and then some other shape key, then tie the second shape key to be driven by the movement of an object, such as an empty, everything works just fine. For example, I took a cube, applied a base shape key, then went into edit mode and scaled the cube a bit and applied another shape key. Move the slider, the cube scales as expected. Add an empty somewhere else. Go into the IPO editor in shape mode, select the key for the cube, add a driver tied to the empty so that when it moves in, say, the Y axis, the cube scales. Works like a champ.
But if I want to parent the empty driving the shape key to something else and have that something else indirectly control the shape key, all of a sudden the driven shape key no longer works. If I move the object that the empty is parented to, nothing happens. if I go back and move the empty by itself, the shape key works as expected.
Is what I am attempting to do impossible, or am I missing something here? This behavior seems very odd to me. It seems like if the empty is moved, by whatever means, it should still drive the shape key.