Same problem here, all VTs are corrupted when using 'splash', works fine when 
'splash' is removed.
I also get that same distorted image for half a second when logging out of 
gnome, right before gdm shows up.
The VTs do work, however. Logging in and typing 'reboot' restarted the machine.
vga=791 didn't change anything.

edgy, 2.6.17.10-generic, ATI X1400, fglrx

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Latest usplash leaves my consoles corrupted
https://launchpad.net/bugs/63558

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