I confirm this bug on Toshiba Satelite L30-134 with Radeon X200M/fglrx.
Moreover, with 'radeon' xorg driver and overlay turned on I see only
color stripes when playing video.

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When using mplayer, vlc, kmplayer in 7.10 Gusty Gibbon with ATI card fglrx, xv 
overlay, the video appears "Shaky"
https://bugs.launchpad.net/bugs/131943
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