Yet another update. It turns out that compositing proved not to be the
culprit; things got bad faster if compositing was on, but eventually it
happens anyway even if compositing was off. I was teaching recently and
the display on my laptop was fine, but the display that the class saw
was weaving in a slow samba dance. A bit embarassing. Had to reboot to
fix it.

I now think the real culprit is kernel mode setting. I added a file 
/etc/modprobe.d/radeon.conf with the following line:
options radeon modeset=0

Since I added this, I have not seen wiggling displays. It is back to
being a bit more like my previous experiences: I frequently have to
restart X if I want the monitor to be recognized at its highest
resolution. However, at least the display itself works, and the machine
is more stable than with KMS on.

-- 
Modesetting fails if large screen monitor attached at boot
https://bugs.launchpad.net/bugs/570011
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which is subscribed to xserver-xorg-video-ati in ubuntu.

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