You tried
$('*:not(.exclude, .exclude *)').live( ... )
? [And I see - the problem is that even if you exclude the material, the events are still bubbling.
Try something like this:
$('*').live('click', function(e) { if (!$(e.target).is('.exclude, .exclude *'))
This should stop the event from spreading to excluded things, without actually doing anything.
Example page: http://gutfullofbeer.net/balloon.html
change the update after 3 years: the .live() method is currently deprecated. The final example should look like this:
$('body').on('click', '*', function(e) { if (!$(e.target).closest('.exclude').length) {
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