Just in case anyone reads this and has the same problem, here is a workaround:
Edit /etc/modprobe.d/radeon-kms.conf and insert/change the line 
options radeon modeset=0
This restores the "old" behavior of the driver as in Ubuntu <= 9.10 (working 
tty's, reasonably fast, compositing only with xrender, not with opengl).

When the bug is eventually resolved, change it back to options radeon
modeset=1

Patrick

-- 
[Multi-GPU] No virtual terminals on radeon HD 3200/3400
https://bugs.launchpad.net/bugs/540547
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