I also confirm this bug with the following experiences:

[Laptop, Intel 855 GM]

When I upgraded from Hardy to Lucid,  laptop did not boot until I re-
enabled KMS  (according to
https://wiki.ubuntu.com/X/Bugs/Lucidi8xxFreezes ).  Everything else then
worked almost fine, except it few times unexpectedly crashed (screen
flashed -> hard freeze).  Video worked fine with some minor problems on
external monitor.

I started to use a program with 3D graphics and computer was crashing
frequently when using external monitor. Then I tried to switch  video
driver to the older one from PPA X-retro repos.  It did not help much
(only video with external monitor got better), so I switched back to
official Ubuntu driver. After that xv always crashes.

Now I use retro - driver  (see
https://edge.launchpad.net/~ubuntu-x-swat/+archive/x-retro ) with quite
success. Problems with external monitor still remain (flickering with
login screen, occassional crashes).

This steps I had to perform to make my laptop work under Lucid:

1. re-enable KMS ( at least to be able to boot )
2. downgrade the video driver to avoid video crashes ( it works generally 
better even when original driver works  also)
3. Enable FrameBuffer Device in xorg.conf to avoid  crashes on VT switch ( it 
was the same with Hardy )
4. avoid using 3D acceleration on external monitor

-- 
[855GM] GPU hang when an application tries to use XVideo
https://bugs.launchpad.net/bugs/554835
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which is subscribed to xserver-xorg-video-intel in ubuntu.

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