This issue is solved with the 8.632 build from ati.  I ran the 
ati-driver-installer-9-4-x86.x86_64.run --buildpkg Ubuntu/jaunty 
Build went fine, and I then installed the deb packages the installer generated.

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[HD 4870] Power-off and power-on of monitors in multiheaded fglrx xorg 
configuration causes X freeze
https://bugs.launchpad.net/bugs/370051
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