Your fiddle works well if you set:
.custom-combobox-input {
margin: 0;
padding: 0.4em;
}
I think it's related oh how Webkit consider decimal em in this situation, but it must be ivestigated more deeply.
From jQuery UI bugs forum:
The combobox is just a demo, it's not a fully complete widget. We won't maintain functionality beyond our demo unless we pull combobox in as an official plugin that we support.