Comment 37 for bug 1316873

This is really hard to spot but if you keep clicking for a minute you'll notice that the /proc/interrupts doesn't does change when the mouse events stop appearing in the xinput test and /dev/input/mouse0 outputs.

Add in a third terminal to my simple test frame work with this command:
watch -d -n 0.1 cat /proc/interrupts

You'll need to align the terminal windows properly in order to spot the error with your eyes. If others find the same problem. Then this bug might be in the kernel.