On further experimentation I have  found that the video cutoff is triggered on 
init by ureadahead, and will re-occur anytime ureadahead is reprofiled or was 
last profiled on a boot invoking this bug. Since it does not occur with kernels 
prior to 2.6.34-(anything)-generic, it must be in the kernel somewhere.

Removing /etc/init/ureadahead.conf and /etc/init/ureadahead-other.conf prevents 
video cutoff, at cost of about 15 sec boot time penalty. Similar time penalty 
or worse if video cutoff occurs with ureadahead.conf installed.
The boot time penalty of either accepting the video cutoff(which delays the 
desktop) or removing ureadahead is significant but less that the time lost 
fixing this after each and every update that reprofiles ureadahead.
If this but gets to the final release, people using the AMD 785 chipset will 
need to install kernel 2.6.32-(anything)-generic, boot from it once so 
ureadahead can get a good boot to profile, then boot the normal kernel. This 
will have to be repeated any time an update reprofiles ureadahead.


                                          
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-- 
ATI Video  output cuts off completely during boot for several seconds
https://bugs.launchpad.net/bugs/599196
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