Update (with some kind of solution): 
What I have tried so far:
- Disabling KMS explicitly at grub prompt: no change
- Disabling vesafb: blank screen
- Disabling Plymouth: no change

Another thing I tried right now, was installing the AMD Catalyst 12.11
Beta 8 driver. So far (tested it with 6 or 7 reboots) it seems to work.
Also switching users works again (but there are some quirks if you try
to switch back to the first user again. You have to use ctrl-alt-F7, but
that can be a general problem and may be not related to the fglrx driver
as it seems to switch to the wrong console if one uses "Switch User" in
the xfce menu).

Long story short: No graphic errors and no visible VT cursor so far.

What one has to do after installing the beta driver, is editing the file 
/etc/ati/signature
After the installation of the beta driver, one gets an unpleasant watermark in 
the lower right corner of the screen which tells that the driver is for testing 
purposes only. To get rid of this, edit the mentioned file and replace the 
content with

9777c589791007f4aeef06c922ad54a2:ae59f5b9572136d99fdd36f0109d358fa643f2bd4a2644d9efbb4fe91a9f6590a145:f612f0b01f2565cd9bd834f8119b309bae11a1ed4a2661c49fdf3fad11986cc4f641f1ba1f2265909a8e34ff1699309bf211a7eb4d7662cd9f8e3faf14986d92f646f1bc

(all in one line)

Hope that helps!

-- 
You received this bug notification because you are a member of Desktop
Packages, which is subscribed to fglrx-installer in Ubuntu.
https://bugs.launchpad.net/bugs/1067320

Title:
  1002:6798 [fglrx] VT cursor is visible and blinking on top of Unity
  Radeon HD 7970 and 5450

Status in “fglrx-installer” package in Ubuntu:
  Confirmed
Status in “unity” package in Ubuntu:
  Confirmed

Bug description:
  A black cursor is blinking on top of the screen.
  It is not as regular as a true shell prompt (because of glitches), but I'm 
sure this is the cursor of the underlying TTY.

  If I try to switch to any other TTY, the focus remains on the desktop
  (eg. I can still click and type in Firefox) but the black cursor does
  move as I type.

  For example, I just switched to TTY 1 and was able to log-in (I see it
  because of the cursor position on the screen), while my username and
  my password were also written in the text-box where I'm writing this
  bug report.

  This bug is really odd and annoying.

  ProblemType: Bug
  DistroRelease: Ubuntu 12.10
  Package: unity 6.8.0-0ubuntu2
  ProcVersionSignature: Ubuntu 3.5.0-17.28-generic 3.5.5
  Uname: Linux 3.5.0-17-generic x86_64
  NonfreeKernelModules: fglrx
  .tmp.unity.support.test.0:
   
  ApportVersion: 2.6.1-0ubuntu3
  Architecture: amd64
  CompizPlugins: No value set for 
`/apps/compiz-1/general/screen0/options/active_plugins'
  CompositorRunning: compiz
  Date: Tue Oct 16 13:34:59 2012
  DistUpgraded: Fresh install
  DistroCodename: quantal
  DistroVariant: ubuntu
  DkmsStatus:
   fglrx-updates, 9.000, 3.5.0-17-generic, x86_64: installed
   virtualbox, 4.1.18, 3.5.0-17-generic, x86_64: installed
  GraphicsCard:
   Advanced Micro Devices [AMD] nee ATI Tahiti XT [Radeon HD 7970] [1002:6798] 
(prog-if 00 [VGA controller])
     Subsystem: Micro-Star International Co., Ltd. Device [1462:2780]
  InstallationMedia: Ubuntu 12.10 "Quantal Quetzal" - Beta amd64 (20121004)
  MachineType: MSI MS-7752
  ProcEnviron:
   TERM=xterm
   PATH=(custom, no user)
   XDG_RUNTIME_DIR=<set>
   LANG=fr_FR.UTF-8
   SHELL=/bin/bash
  ProcKernelCmdLine: BOOT_IMAGE=/boot/vmlinuz-3.5.0-17-generic 
root=UUID=9054a8bb-9c6c-4689-be51-a5fece8e4155 ro quiet splash vt.handoff=7
  SourcePackage: unity
  UpgradeStatus: No upgrade log present (probably fresh install)
  dmi.bios.date: 09/04/2012
  dmi.bios.vendor: American Megatrends Inc.
  dmi.bios.version: V2.6
  dmi.board.asset.tag: To be filled by O.E.M.
  dmi.board.name: Z77A-G45 (MS-7752)
  dmi.board.vendor: MSI
  dmi.board.version: 1.0
  dmi.chassis.asset.tag: To Be Filled By O.E.M.
  dmi.chassis.type: 3
  dmi.chassis.vendor: MSI
  dmi.chassis.version: 1.0
  dmi.modalias: 
dmi:bvnAmericanMegatrendsInc.:bvrV2.6:bd09/04/2012:svnMSI:pnMS-7752:pvr1.0:rvnMSI:rnZ77A-G45(MS-7752):rvr1.0:cvnMSI:ct3:cvr1.0:
  dmi.product.name: MS-7752
  dmi.product.version: 1.0
  dmi.sys.vendor: MSI
  version.compiz: compiz 1:0.9.8.4-0ubuntu2
  version.fglrx-installer: fglrx-installer N/A
  version.ia32-libs: ia32-libs N/A
  version.libdrm2: libdrm2 2.4.39-0ubuntu1
  version.libgl1-mesa-dri: libgl1-mesa-dri 9.0-0ubuntu1
  version.libgl1-mesa-dri-experimental: libgl1-mesa-dri-experimental N/A
  version.libgl1-mesa-glx: libgl1-mesa-glx 9.0-0ubuntu1
  version.xserver-xorg-core: xserver-xorg-core 2:1.13.0-0ubuntu6
  version.xserver-xorg-input-evdev: xserver-xorg-input-evdev 1:2.7.3-0ubuntu2
  version.xserver-xorg-video-ati: xserver-xorg-video-ati 
1:6.99.99~git20120913.8637f772-0ubuntu1
  version.xserver-xorg-video-intel: xserver-xorg-video-intel 2:2.20.9-0ubuntu2
  version.xserver-xorg-video-nouveau: xserver-xorg-video-nouveau 
1:1.0.2-0ubuntu3

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