For me, disabling the KMS (echo options radeon modeset=0 >
/etc/modprobe.d/radeon-kms.conf) fixes the main problem, but introduces
other problems (ugly boot, black borders around some windows, etc--but
these are not in the scope of this bug).

In contrast to #30, I did not have the problem in 9.10--was KMS even an
option there?  I think it's obvious that moving some code to the kernel
has introduced the problem, but we need someone qualified to make a fix.
I'm afraid kernel hacking is far out of my comfort zone.

I think at this point the bug will remain in Lucid's release.  Hopefully
after the stress of an upcoming release has passed, someone will be able
to take a look.

-- 
[Legacy Radeon cards] Desktop effects/compiz: dim display when zooming
https://bugs.launchpad.net/bugs/539163
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