I'm going to mark the Lucid task as Won't Fix (since I opened the bug).
RenderAccel is now disabled in upstream radeon sources when using XAA
and Lucid no longer suffers from this bug.

** Changed in: notify-osd (Ubuntu Lucid)
       Status: Triaged => Won't Fix

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[lucid] notify-osd displays black box when KMS and compiz are disabled on ATI 
Radeon Mobility 7500
https://bugs.launchpad.net/bugs/513968
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