I've now installed the proprietary fglrx driver, reinstated the
"vt.handoff=7" in /etc/grub.d/10_linux and then did a "Sudo update-
grub".

Upon booting with the current Ubuntu 3.5.0-17-28 kernel, I didn't have a
black screen anymore. Other than that, there's next to none difference
between booting with "vt.handoff=7" disabled and enabled. With it
disabled, there's a 2-3 second black screen between thwe boot screen and
the LightDM login screen. With it enabled, the pause is 1-2 seconds. So
neither gives me a smooth transition between boot screen and login
screen, as I had with the opensource driver.

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https://bugs.launchpad.net/bugs/1057532

Title:
  Monitor goes black ("no signal") after Grub, comes back to life when X
  starts

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