Looks like there's a patch upstream that fixes it, not yet pushed.
Presumably this will be included in 2.8, and maybe 2.7.2.
** Changed in: xserver-xorg-video-intel (Ubuntu)
Status: Triaged => In Progress
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[i915G] Low resolution mode set from non-existent VGA connection
https://bugs.launchpad.net/bugs/273306
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