Verified fixed in mutter version 42.1-0ubuntu1 on jammy.

I've also written a full test case at the top of the page.

** Tags removed: verification-needed verification-needed-jammy
** Tags added: verification-done verification-done-jammy

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https://bugs.launchpad.net/bugs/1948410

Title:
  [nvidia] Software cursor in Wayland sessions (EGLStreams)

Status in Mutter:
  Unknown
Status in mutter package in Ubuntu:
  Fix Released
Status in mutter source package in Jammy:
  Fix Committed

Bug description:
  Impact
  ------
  In the Wayland session with older Nvidia graphics (usually nvidia driver 
470), a software cursor is used instead of a hardware cursor. This causes worse 
performance with unnecessary updates of the display.

  Test Case
  ---------

  1. Set up an Nvidia-only desktop. No other GPUs active. Driver version
  must be 470 or higher.

  2. Add this to /etc/environment:

     MUTTER_DEBUG_FORCE_EGL_STREAM=1
     CLUTTER_PAINT=damage-region

  3. Reboot.

  4. Log into 'Ubuntu on Wayland'.

  Observed: The red and blue boxes from the above debugging option
  follow the mouse cursor.

  Expected: No red and blue boxes follow the mouse cursor.

  What Could Go Wrong
  -------------------
  See the master bug for this mutter update LP: #1972726

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