I am getting this bug, too, with it exhibiting exactly the same
behavior. I am using Kubuntu 9.04 desktop/amd64 with the fglrx driver
(on an ATI 3850). I, too, can repro it 100%, and it makes the Desktop
Effects unusable.

I have a second machine running Kubuntu 9.04 desktop/32-bit on an NVIDIA
Ti4200, and the problem is not present there; the Desktop Effects seem
to work fine.

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Desktop effects fail even though 3d works everywhere else
https://bugs.launchpad.net/bugs/366843
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