Right, this is essentially bug 1040526 .  Lightdm (the login manager)
can't cope with the 8 bit pseudo colour and completely screws up its
display.  Once you log in (by just typing your password) the display is
okay (all be it in 8 bit).

For the live/desktop ISO install I had selected to login automatically
and this is why I wasn't seeing the problem on that install.

Workaround is to increase the colour depth via an xorg.conf (as you
say):

Section "Screen"
  Identifier "Screen0"
  DefaultDepth  24
EndSection 

Or turn on KMS.  If KMS is not selecting an appropriate modeline then
you should be able to define your own like you've done before, but
called the mode "800x600" instead of "800x600_60.00".  It'll probably
want to put you into "1024x768" so make sure you define a modeline for
that.

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https://bugs.launchpad.net/bugs/1044180

Title:
  Screen Freeze on Bootup - Lubuntu 12.10 PPC Alternate Aug 30 Build

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