Turns out, my issue looked like this bug, but was not related after all.

While fixing another bug in laptop-mode-tools I wrote "-X" instead of "-x" 
causing the xorg process to spike to 100% cpu usage.
I apologize for the confusion.

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[karmic] Xorg 100% CPU utilization -- only after first login
https://bugs.launchpad.net/bugs/439138
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