Finally resolved this issue, at least for my purposes. Folks on the
thread were correct that there was a driver issue but I could not figure
out how to get the intel drivers to load even though they were
installed. The problem was that I had set GRUB to nomodeset to resolve
an earlier issue  (when I installed Ubuntu 12.04 LTS there was a problem
with the drivers resulting in a blank screen). This must have been
preventing the correct drivers from loading. I tried to restore GRUB but
it kept stalling on boot. I ended up replacing Ubuntu 12.04 with LUbuntu
12.10. Now everything is running smoothly. Videos on XBMC are running
the CPU about 10% and everything looks a lot better (I had to set
resolution to 720p previously).

However, this may not address the underlying driver issue with Ubuntu
12.04 LTS.

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https://bugs.launchpad.net/bugs/1074779

Title:
  llvmpipe used after clean install instead of intel

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