It turns out it is an issue in the X driver. Thanks to develcuy for the fix! You simply change the accelaration mode from EXA to XAA in the xorg.conf file:
you insert in
Identifier "Configured Video Device"
Option "AccelMethod" "XAA" # not EXA
It's also supposed to help with some memory issues. I will see if that maybe fixes my problems with plasma x shared pixmap cache I just posted about earlier. Even though its the older one of the two x acceleration infrastructures, the intel driver's support of it seems much more stable and fast.
It turns out there is a better fix for this issue, just upgrade to the newest driver package.
The new driver package does not always fix the issue. I hope that these fixes will not be required for Kubuntu 8.10.