The solution for the CTM problem (which is what causes the wacky cursor
jumping) is this patch, which was accepted into upstream on 19 Nov 2012;
it is not yet in precise-proposed, but I was able to rebuild xorg-
server-1.13.0 (from 12.10) with this patch and the problem went away:

http://www.mail-archive.com/xorg-devel@lists.x.org/msg33742.html

There is another version of the patch floating around somewhere if you
want to fix 12.04.

IMHO, there is no good reason to break evdev's swap and invert
properties, though. For the simple rotation case, they seem like the
obvious right thing to use. Why should they not work?

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which is subscribed to xorg-server in Ubuntu.
https://bugs.launchpad.net/bugs/774938

Title:
  Erratic cursor movement when using "Coordinate Transformation Matrix"

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