This bug affects me as well; exact same symptoms as described above,
with a fresh 10.04 x86_64 Beta 2 install & synaptic update on the Host
machine.

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[lucid kvm-qemu]High cpu usage when moving mouse
https://bugs.launchpad.net/bugs/553081
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which is subscribed to xserver-xorg-input-vmmouse in ubuntu.

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