Jank's proposed:

Index: /Users/jan/webdev/moodev/mootools/trunk/Source/Element/Element.Event.js
===================================================================
--- /Users/jan/webdev/moodev/mootools/trunk/Source/Element/Element.Event.js        (revision 939)
+++ /Users/jan/webdev/moodev/mootools/trunk/Source/Element/Element.Event.js        (working copy)
@@ -463,9 +463,10 @@
                 >myElement.fireEvent(type[, args[, delay]]);
 
         Arguments:
-                type  - (string) The event name (e.g. 'click')
-                args  - (mixed, optional) Array or single object, arguments to pass to the function. If more than one argument, must be an array.
-                delay - (number, optional) Delay (in ms) to wait to execute the event.
+                type   - (string) The event name (e.g. 'click')
+                args   - (mixed, optional) Array or single object, arguments to pass to the function. If more than one argument, must be an array.
+                delay  - (number, optional) Delay (in ms) to wait to execute the event.
+                bubble - (boolean, optional: defaults to true) If set to false the event will not bubble up the document tree.
 
         Returns:
                 (element) This Element.
@@ -479,12 +480,18 @@
                 This will not fire the DOM Event (this concerns all inline events ie. onmousedown="..").
         */
 
-        fireEvent: function(type, args, delay){
+        fireEvent: function(type, args, delay, bubble){
+                if(!$defined(bubble)) bubble = true;
                 if (this.$events && this.$events[type]){
                         this.$events[type].keys.each(function(fn){
-                                fn.create({'bind': this, 'delay': delay, 'arguments': args})();
+                                var ret = fn.create({'bind': this, 'delay': delay, 'arguments': args})();
+                                bubble &= !$defined(ret) || ret;
                         }, this);
                 }
+                if (bubble && this.parentNode && ($type(this) == 'element')) {
+                        var parent = this.getParent();
+                        parent.fireEvent.apply(parent, arguments);
+                }
                 return this;
         },