Some further information:

I am using Firebird 1.0.3 with a Delphi 7 application. I am using
the Interbase Express components that come with Delphi 7. I haven't
got any third party UDF libraries or anything of that sort.

My understanding of transactions is very limited, so I am hoping
someone can tell me that what I am doing is completely ridiculous!
Basically, I have one TIBTransaction object on my data module, and
that is being used by every single query object. The AfterPost and
AfterDelete events of any query that can be updated calls
MyTransaction.CommitRetaining.

The transaction is set to read_commited.