@unggnu: What do you mean by "Overlay for video output isn't used
anymore in current Hardy"?

I guess your video is not played via xv, but via X11/shm. Please try
mplayer -vo xv file.avi . Video rendering should go trough xv. All other
video output methods consume either too much CPU (X11/shm) or could
interference with other applications (gl output breaks games, compiz).

Although I agree with you, that actually, using the intel driver, video
playback is smooth with x11 output compared to xv with compiz enabled.

** Summary changed:

- xv is not working on intel 965 (x3100) when using compiz
+ xv is not working on intel when using compiz

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xv is not working on intel when using compiz
https://bugs.launchpad.net/bugs/201596
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