Which version of Premiere Pro are you using.
From which version did you update to mountain lion? It was a known issue in Lion.
Check the issue by disconnecting secondary display and just using the primary monitor.
Sorry, CS5.5, upgrade was from Snow Leopard. I will try disconnecting the secondary display.
Disconnecting the monitor alone did not resolve the issue. I will disconnect the Matrox next, just got to render first. Theory that the second display is cause seems to stand as my other machine, running 10.8.2 without second monitor or Matrox, has no eye droppper issue. Thanks.