I can also confirm this. ATi 9800.  I prefer to use the open drivers
since video playback is better with them in comparison to the fglrx, and
compiz worked very well with them in the past.

1. ensure compiz is disabled in Appearance.
2. Uninstall fglrx using the restricted drivers manager.
3. restart is needed.
4. open up visual effects and try to enable effects, it doesn't matter if you 
select normal/extra/custom
5. the password prompt pops up
6. once the password has been entered the fglrx driver is automatically 
downloaded and installed, with no prompt.
7. a notification appears with "Please run "Apperance/Desktop Effects" again 
after restarting the computer, when the new graphics driver is active."

i can post up my xorg.conf if needed, also note the misspelling of
"Appearance"


although i see the point that compiz will work 'better' with the fglrx drivers, 
they should not be required.

-- 
[hardy] visual effects require proprietary drivers don't needed in gutsy
https://bugs.launchpad.net/bugs/200086
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