Unfortunately, triggering a manufactured/simulated mouse event won't work, since when you dispatch it, you have to provide a target element. Since that element is the one you're trying to figure out, all you could do is dispatch it on the body, as if it had already bubbled.
You really are left to do it on your own, that is manually walk through the elements you're interested in, and compare their position/size/zIndex to your x/y point and see if they overlap. Except in IE and more recently FF3, where you can use
var el = document.elementFromPoint(x, y);
See
http://developer.mozilla.org/En/DOM:document.elementFromPoint
http://msdn.microsoft.com/en-us/library/ms536417(VS.85).aspx
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