Comment 4 for bug 136396

On a hunch, I tried booting to the Gutsy daily-live CD of today (Sat Sep 1 2007).
This did not solve the issue.
However, I then tried repeatedly tapping CTRL-ALT-F1 during boot as to get to a console, and then proceeded to stop GDM (sudo /etc/init.d/gdm stop).
Then, I proceeded to remove the compiz-related packages and restarted GDM after doing a killall gdm just to be sure.
Surprisedly, I was this time greeted with a working desktop, however I had to start metacity myself for some reason.

This bug might possibly be related to Desktop Effects support detection?