[Lenovo E525] Switching video modes causes severe corruption / can't display larger modes

To reproduce, install 12.04 LTS onto a Lenovo E525 with the ATI video card.
Run the script /usr/share/checkbox/scripts/xrandr_cycle

After the first few larger modes, video will become horribly corrupted and may not recover once the script tries to restore the original mode.

Essentially, the script determines what modes are availabe then switches to those modes to verify they work. Once the resolution gets small enough (less pixels), I noted severe screen corruption.

See the attached video. the fun really stars around the 30 second mark. On that video, the screen did not recover afterwards. I had to powercycle the machine to get the screen back to a usable state.

ProblemType: Bug
DistroRelease: Ubuntu 12.04
Package: xserver-xorg-video-radeon 1:6.14.99~git20111219.aacbd629-0ubuntu2
ProcVersionSignature: Ubuntu 3.2.0-23.36-generic 3.2.14
Uname: Linux 3.2.0-23-generic x86_64
.tmp.unity.support.test.0:

ApportVersion: 2.0.1-0ubuntu5
Architecture: amd64
CompizPlugins: [core,composite,opengl,compiztoolbox,decor,vpswitch,snap,mousepoll,resize,place,move,wall,grid,regex,imgpng,session,gnomecompat,animation,fade,unitymtgrabhandles,workarounds,scale,expo,ezoom,unityshell]
CompositorRunning: compiz
Date: Mon Apr 30 17:03:18 2012
DistUpgraded: Fresh install
DistroCodename: precise
DistroVariant: ubuntu
ExtraDebuggingInterest: Yes, whatever it takes to get this fixed in Ubuntu
GraphicsCard:
 Advanced Micro Devices [AMD] nee ATI Device [1002:9648] (prog-if 00 [VGA controller])
   Subsystem: Lenovo Device [17aa:21ea]
InstallationMedia: Ubuntu 12.04 LTS "Precise Pangolin" - Release amd64 (20120425)
MachineType: LENOVO 120024U
ProcEnviron:
 TERM=xterm
 PATH=(custom, no user)
 LANG=en_US.UTF-8
 SHELL=/bin/bash
ProcKernelCmdLine: BOOT_IMAGE=/boot/vmlinuz-3.2.0-23-generic root=UUID=7be665df-e57e-4705-b25f-dc731dc08c68 ro quiet splash initcall_debug vt.handoff=7
SourcePackage: xserver-xorg-video-ati
UpgradeStatus: No upgrade log present (probably fresh install)
dmi.bios.date: 07/14/2011
dmi.bios.vendor: LENOVO
dmi.bios.version: 8IET33WW(1.06)
dmi.board.asset.tag: Not Available
dmi.board.name: 120024U
dmi.board.vendor: LENOVO
dmi.board.version: Not Available
dmi.chassis.asset.tag: No Asset Information
dmi.chassis.type: 10
dmi.chassis.vendor: LENOVO
dmi.chassis.version: Not Available
dmi.modalias: dmi:bvnLENOVO:bvr8IET33WW(1.06):bd07/14/2011:svnLENOVO:pn120024U:pvrThinkPadE525:rvnLENOVO:rn120024U:rvrNotAvailable:cvnLENOVO:ct10:cvrNotAvailable:
dmi.product.name: 120024U
dmi.product.version: ThinkPad E525
dmi.sys.vendor: LENOVO
version.compiz: compiz 1:0.9.7.6-0ubuntu1
version.ia32-libs: ia32-libs N/A
version.libdrm2: libdrm2 2.4.32-1ubuntu1
version.libgl1-mesa-dri: libgl1-mesa-dri 8.0.2-0ubuntu3
version.libgl1-mesa-dri-experimental: libgl1-mesa-dri-experimental N/A
version.libgl1-mesa-glx: libgl1-mesa-glx 8.0.2-0ubuntu3
version.xserver-xorg-core: xserver-xorg-core 2:1.11.4-0ubuntu10
version.xserver-xorg-input-evdev: xserver-xorg-input-evdev 1:2.7.0-0ubuntu1
version.xserver-xorg-video-ati: xserver-xorg-video-ati 1:6.14.99~git20111219.aacbd629-0ubuntu2
version.xserver-xorg-video-intel: xserver-xorg-video-intel 2:2.17.0-1ubuntu4
version.xserver-xorg-video-nouveau: xserver-xorg-video-nouveau 1:0.0.16+git20111201+b5534a1-1build2