Forgot, I'm running 10.10 on x86_64 quad core.
I followed the suggestion in bug 545521 and removed everything under 
~/.gconf/apps/panel/general and ~/.gconf/apps/panel/toplevels, rebooted and 
then everything worked (but all customization was lost of course).
Attaching the removed files in case they are of any interest.


** Attachment added: "gnome-panel.tar.bz2"
   
https://bugs.launchpad.net/ubuntu/+source/gnome-panel/+bug/479826/+attachment/3305019/+files/gnome-panel.tar.bz2

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https://bugs.launchpad.net/bugs/479826

Title:
  gnome-panel consuming 100% of CPU and driving up memory

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