Sharepoint 2007 Report Viewer doesn't seems to work with cascading parameter, you have to click on apply to see the data on the parameter drop down. This viewer is part of sharepoint webpart, same thing happens with report subscription.
Update:
This is from old article (2004) by Jay Nathan's Weblog
RS Web Parts - Cascading parameters - this is not supported in Report Viewer web part when running in stand-alone mode.
This is from msdn forum - AJAX & ReportViewer
Due to the way the report viewer uses script, it is currently not compatible with an UpdatePanel. We are aware of this problem and looking into the necessary changes to get the ReportViewer working in an UpdatePanel. But at present, there is no work around. While it may appear you can get simple reports working in this scenario, some of the more subtle report viewer behavior will still be broken, such as its code that keeps the report session alive when the browser window is left open.
Due to the way the report viewer uses script, it is currently not compatible with an UpdatePanel. We are aware of this problem and looking into the necessary changes to get the ReportViewer working in an UpdatePanel. But at present, there is no work around. While it may appear you can get simple reports working in this scenario, some of the more subtle report viewer behavior will still be broken, such as its code that keeps the report session alive when the browser window is left open.
