To answer my own question: I simply downgraded to the Intrepid version of the 
package:
http://archive.ubuntu.com/ubuntu/pool/main/h/hotkey-setup/hotkey-setup_0.1-23ubuntu7_i386.deb

The OSD notification now works nicely, and nothing else seems to have
been broken by this downgrade. As expected, the volume is now "double
stepping", but I can live with that.

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Hotkeys for changing volume and muting broken with jaunty (on Thinkpad R60, 
T40, T43, X41 and T60)
https://bugs.launchpad.net/bugs/364127
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