Comment 1 for bug 149260

I've posted a .deb of the latest intel driver git HEAD here if you would like to test it:
http://people.ubuntu.com/~bryce/Testing/intel/xserver-xorg-video-intel_2.1.1~git20071004-0ubuntu1_i386.deb

Since it's straight out of git, it may include new issues. Direct rendering often stops working, for instance. However it would be interesting to hear if it addresses this issue or not.