I am applying a CSS transform (and the browser specific -webkit, -o etc):
transform: matrix(0.5 , 0 , 0, 0.5, 0 , 0);
to a div then using jQuery\'s draggable
i had a similar problem with transformation and ended up solving it with css:
transform-origin
http://www.w3schools.com/cssref/css3_pr_transform-origin.asp
have you tried it? maybe it will help.