I can confirm this bug -- Looks like we have the same laptop and have
the exact same symptoms,  Plain vanilla does not indeed work: on boot,
screen changes mode 3 times before settling on 1920x1080 -- then gives
"low graphics mode" dialog on lightdm startup.  Must boot with nomodeset
and set mode manually for this chip.  Still can't get the color depth
correct either.  Using xorg-edgers and oibaf ppa drivers.

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https://bugs.launchpad.net/bugs/1322413

Title:
  Radeon HD 8670M sets wrong color depth

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