I have the same problem with a "Radeon 7200" [R100] card for the current 
"daily-live" image. The screen is completely unresponsive then, and I actually 
need to kill the "X" server, because the screen is completely messed up, and 
the desktop does not even fall back to "non-compiz" mode.
In my case, the problem can be settled by adding a file "/etc/drirc" with the 
following content before launching the "X" server:

    <driconf>
        <device screen="0" driver="radeon">
        <application name="all">
          <option name="allow_large_textures" value="2" />
        </application>
      </device>
    </driconf>

** Attachment added: ""Gutsy Gibbon" screenshot for "ATI Radeon 7200" at 
"1400x1050""
   http://launchpadlibrarian.net/8315570/compiz-r100.png

-- 
3d effects mess up the desktop
https://bugs.launchpad.net/bugs/99921
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