I can confirm through my own experiences that this problem is still
present in both the Feisty (7.04) and Gusty Tribe 5 (7.10) live cds

In either version:
With two monitors turned on and present, Screen 1 will appear fine for a few 
moments while Screen 2 looks like its stuck in 80x25 text mode only with 
flashing colors and high-ASCII characters on the screen. When the splash screen 
appears (Xsession splash screen, not the boot screen) it gets squished down 
into a few lines on top of Screen 1. In my case I'm able to at least move the 
mouse--but I have nothing to click on (or nothing changes); my keyboard is also 
unresponsive and I can't attempt to kill X or switch to a virtual term.

I'm able to boot both live cds in safe graphical mode (using the vesa driver)
Nvidia's binary driver works perfectly after install 

** Attachment added: "lspci output"
   http://launchpadlibrarian.net/9286001/lspci

-- 
Corrupt graphics on boot with 7800GT/nv
https://bugs.launchpad.net/bugs/62230
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