@idyllic: Thanks for your information!

With this tip and a bit of perseverance (through some unstartable
boots!) I was able to get my system working well again.

It seems like these were the crucial steps for me:

1. Uninstall ATI driver.
2. Revert xorg-server package to xserver-no-backfill, using Synaptic Force 
Version like you suggested.
3. Reinstall ATI driver (I installed the one downloaded from ATI manually).
4. Restart.
5. Re-enable desktop effects.

System now appears to be running well.

JH

-- 
[M76] [ubuntu 9.04] [ubuntu 9.10] slow unminimizing with ati card and desktop 
effects enabled
https://bugs.launchpad.net/bugs/351186
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which is subscribed to fglrx-installer in ubuntu.

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