are NEW and OLD rule attributes broken?

(Postgres 7.0.3, linux kernel 2.4.2, i386, red hat 7.1)

I'm trying to build rules to automatically populate several tables with
references to any new rows inserted into a primary key table. The primary
key is a sequence. Here's what's going on:

mydb=# create table foo (fooid serial primary key, foonote text);
NOTICE: CREATE TABLE will create implicit sequence 'foo_fooid_seq' for
SERIAL column 'foo.fooid'
NOTICE: CREATE TABLE/PRIMARY KEY will create implicit index 'foo_pkey' for
table 'foo'
CREATE

mydb=# create table bar (fooid integer references foo (fooid) deferrable
initially deferred, barnote text);
NOTICE: CREATE TABLE will create implicit trigger(s) for FOREIGN KEY
check(s)
CREATE

mydb=# create rule brule as on insert to foo do insert into bar (fooid,
barnote) values ( new.fooid, 'blah');
CREATE 30351 1
mydb=# begin;
BEGIN

mydb=# insert into foo (foonote) values ('test row');
INSERT 30353 1

mydb=# select * from foo;
fooid | foonote
-------+----------
2 | test row
(1 row)

mydb=# select * from bar;
fooid | barnote
-------+---------
1 | blah
(1 row)

mydb=# commit;
ERROR: <unnamed> referential integrity violation - key referenced from bar
not found in foo

What's going on here? My rule inserted a new row into bar, but the fooid
it used was not the new value inserted into foo. It looks like my rule is
inserting "nextval('foo_fooid_seq')" into the bar table, rather than
inserting the new primary key from the foo table. Is this the intended
behavior? How can I get the result I want?

Cheers,

Forest