Those icons are basically squares. Sometimes, if you can get the computer slow enough, you'll see how all of the icons are squares that are rendered into the icons you normally see. So it's the invisible squares cutting the text. When you see those same problematic letters on the desktop, there's not cut off. If Apple just raised the text up a couple of pixels, it would be perfectly fine.
BTW, this has been noted before. E-mail Apple. I don't think they've noticed all of the complaints still...
If you're like me, and see this as a very minor problem (I never noticed it before you pointed it out, but then, I can't STAND magnification so that may explain why I don't see/care...), then don't sweat it.
It's not something I've noticed, but my Dock is set quite small with the magnification turned off. I've just had a close look and it's not just the text in the area above the icons themselves (as Applekid discusses) my System Preferences icon is on the far left of my Dock, next to the Finder, and the 'y', which has no Dock under it, is also cut off.
And I'm just anal enough to be bothered by this every time I use my Dock.