I can confirm this bug on Ubuntu Intrepid 8.10 with compiz 0.7.8.
One possible solution could be NOT having constrain y toggled by default
(easier). Another solution could be to change the way the constrain y code
works -- that is, impose the constraint not only on the title bar itself, but
on the whole window. That way, you wont be able to resize the window down below
the bottom panel.
** Changed in: compiz (Ubuntu)
Status: New => Confirmed
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Cannot resize window taller than screen.
https://bugs.launchpad.net/bugs/221698
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