The problem was that the SWFLoader was catching the mouse events. So I just placed it in a Canvas and set mouseChildren="false"
for ItemRenderer.
Also set scroll policies of Canvas to 0:
horizontalScrollPolicy="off" verticalScrollPolicy="off"
Now the SWFLoader does not catch the mouse events and hovering items in dropDownList do not overlap each others.
P.S: Thanks one of my colleagues to help me about :)