Peter, yes this is a weird one.

When you say that text "suddenly has the right colors after executing
the first command," I am assuming that you are refering to text already
on the screen.  The unusual characters after the first command are
normal, since this changes from a 256-character font to a 512-character
font, but the fact that those characters are bright is not normal.  They
should be at medium intensity after loading a Uni1 font.

I've seen a bug that causes the characters to fail to change intensity
when switching from a 256-character font to a 512-character font, or
vice versa (LP:392795).  But I've never before seen a case where they
actually switch to the wrong intensity.

Since all is well on your other PC, I decided to experiment with using
Radeon hardware.  Unfortunately I don't have access to a Mobility Radeon
X300, like you have.  I borrowed an X1600, which did not behave as yours
did.  Using it gave me another problem: With it I could never disable
the bright text!  (See
https://bugs.launchpad.net/ubuntu/+source/usplash/+bug/392795/comments/4)

Do I understand your original description correctly? You don't experience a 
problem when GDM isn't started, even if you boot with usplash, and you don't 
experience a problem if you don't boot with usplash, even if GDM is started?
In other words, you must boot with both for this problem to appear?

Sorry not to have anything more helpful for you.

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Ubuntu boot screen causes virtual terminal display problems.
https://bugs.launchpad.net/bugs/392959
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