The hack of putting i915.modeset=1 to the kernel boot line is not necessary 
using driver version 2.11 from 
http://ppa.launchpad.net/glasen/intel-driver/ubuntu repository. This upgrade 
also solved the visual effects problem. 
This is extracted from my lspci output:

VGA compatible controller: Intel Corporation 82852/855GM Integrated Graphics 
Device (rev 02)
00:02.1 Display controller: Intel Corporation 82852/855GM Integrated Graphics 
Device (rev 02)

-- 
blank screen and complete lockup when X starts on Intel 855GM Chipset 
https://bugs.launchpad.net/bugs/566103
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