I downgraded  to the 2:2.4.0-1ubuntu1 version which was the version before the 
textured video was made default.
http://launchpadlibrarian.net/16642729/xserver-xorg-video-intel_2.4.0-1ubuntu1_i386.deb

video overlay is now the default(and only) rendering listed by xvinfo.

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video tearing with textured video on intel card
https://bugs.launchpad.net/bugs/278318
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