When applying resizable to the se handle... you're stacking visual elements.
<div class="ui-resizable-handle ui-resizable-se ui-icon ui-icon-gripsmall-diagonal-se" style="z-index: 1000;"></div>
You'll need to remove the ui-icon and ui-icon-gripsmall-diagonal-se classes.
$("#resizable").find("div.ui-resizable-se").removeClass("ui-icon");
$("#resizable").find("div.ui-resizable-se").removeClass("ui-icon-gripsmall-diagonal-se");
Complete example: http://jsfiddle.net/rwinscot/vNbW5/