FWIW I am running oneiric alpha2 and it works ok in the problem machine.
The alpha2 image is oversize so for a live session a dvd or a USB is
needed. I installed it too, still ok, and subsequent updates are also
looking good. hth

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https://bugs.launchpad.net/bugs/762135

Title:
  [i865] natty - display heavily corrupted

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