Completely purged all fglrx and reinstalled/reconfigured  core xorg components 
and the radeon driver as per the Ubuntu Wiki instructions:
  sudo /usr/share/ati/fglrx-uninstall.sh  # (if it exists)
  sudo apt-get remove --purge fglrx*
  sudo apt-get remove --purge xserver-xorg-video-ati xserver-xorg-video-radeon 
  sudo apt-get install xserver-xorg-video-ati
  sudo apt-get install --reinstall libgl1-mesa-glx libgl1-mesa-dri 
xserver-xorg-core
  sudo dpkg-reconfigure xserver-xorg

General 2D performance is OK. In particular, regular GTK (GNOME) and Qt
(KDE) apps are responsive. CPU usage is normal (was always normal with
-radeon, performance was the problem)

The most severely affected programs for me were the pure java ones
(Netbeans being a particular pain point: Java 2D?) I am using the Sun
Java 1.6 JVM, installed from the Ubuntu repos. I will code in Netbeans
for a while to get a feel for the speed/responsiveness of the system
with these drivers.

In all likelihood, this is not a valid xorg bug. But I will leave it for
someone with more xorg knowledge and experience to close.

-- 
High Xorg CPU usage (95-99%): Karmic x86-64, fglrx, ATI Mobility Radeon HD 2600
https://bugs.launchpad.net/bugs/440448
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which is subscribed to xorg in ubuntu.

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