Just worked around this by changing the "Show windows" rule in "Window
decorations" from "CompizConfig Settings Manager" to "(any) &
!(type=Dock)".

Seems to work OK and is similar to what needs to be done to fix
seamless-RDP.

Jaunty -> Karmic upgraded, Intel integrated graphics chipset.
00:02.0 VGA compatible controller: Intel Corporation 82865G Integrated Graphics 
Controller (rev 02)

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[compiz] applets with Dock type window leave shadow
https://bugs.launchpad.net/bugs/449272
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