Your comments

Yes, the texture was marked as a normal map
Dear god sir, you are fast at responding / fixing. Thank you for your hard work!
I also attached a diff of the generated shader, the line I am talking about is normalDirection, Line 111:113 in the screen shot.
Sorry, was in the process of attaching all my images. Hit submit a bit too early. I've attached the rest of the images and Normal Quality is set to Normalized under Lighting in Settings.
Not sure if this helps track down more issues like this, however in Unity's built in shaders (http://unity3d.com/unity/download/archive) there are two shaders flagged as hidden that might be related to why this works: "Hidden/Camera-DepthTexture" and "Hidden/Camera-DepthNormalTexture"

It makes me wonder if the camera generates the depth texture or depth normal texture using those shaders or something along those lines.
robert, try adding this to the properties section of the shader manually and see if that fixes the issue. It fixed the issue I was having with Depth of Field image effect.

_Cutoff ("Alpha cutoff", Range(0,1)) = 0.5
Just found a hacky fix for this issue. Opening the shader source and adding the line to the properties section of the shader fixes this issue:

_Cutoff ("Alpha cutoff", Range(0,1)) = 0.5

Awesome, thanks robert.briscoe, that did the trick for the shadows!

Might need an alert in SF or something to tell users this.
Just a thought that popped into my head, but could it be due to the way that SF writes to the depth buffer? IE: doesn't take alpha clip into account, I posted some findings about this in this bug:
http://shaderforge.userecho.com/topic/305397-doubl...