I have solved the URL bar bug.
Here's what I did. I decided to download Safari 5.1 for Snow Leopard and take a look at some of the files using Pacifist and compared them to my system files to see if there was a possibility I had some rogue orphans lying about.
Nothing really stood out so I began to systematically manually "install" the Snow Leopard version of Safari. Well, finally I found the directory of files that was causing the bug. I am not sure exactly what file(s) but I do know that Safari.framework which is located in /System/Library/PrivateFrameworks was causing the problem. So, I extracted Safari.framework from the Snow Leopard install package and copied it over to /System/Library/PrivateFrameworks.
If you want to save yourself some time, I've included a link to a zip file containing just the folder Safari.framework taken directly from the Snow Leopard Safari install package.
EDIT: THIS WILL REMOVE ANY SPECIFIC LION FEATURES FROM SAFARI. ALSO, THIS SHOULD GO WITHOUT SAYING, BUT PLEASE BACK UP ANY FILES YOU PLAN TO REPLACE FIRST!
http://www.mediafire.com/?fpie39iu5su9m3m
1.) Quit Safari
2.) Unzip Safari.framework.zip
3.) Copy the entire folder Safari.framework to Mac/System/Library/PrivateFrameworks. You will need to authenticate and overwrite all files (don't keep "newer versions" as that won't fix the problem).
4.) Relaunch and done.
Hope this helps.