Aha! Fast User Switching has to be on in order for SeamlessRDP to work.
I've updated the wiki page at
https://help.ubuntu.com/community/SeamlessVirtualization.

** Changed in: rdesktop (Ubuntu)
     Assignee: (unassigned) => Jon Anderson
       Status: Unconfirmed => Fix Released

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Seamless RDP Not Seamless
https://bugs.launchpad.net/bugs/95088
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