Today I had some time to invest into this.
I got the latest git source from linus kernel tree (commit 7c9abfb884b8737f0afdc8a88bcea77526f0da87), compiled it and started it.
This has all to do with my startup scripts first setting "xrandr --set mode PAL" (since there is no other way) and then a application sets "xrandr --mode 1024x768". If I never do set the mode to PAL everything (except for the picture flashing a bit brigther) works correctly. Below I have documented how I found a way to reproduce using xrandr and glxgears (and xterm as a non-3d reference window).

starting computer to console. Logging in using ssh as your favorite user. ## prefixes comments about what I am about to do, $ prefixes commands of what I did:

## Start X and wait for it to settle
$ X & 
## To make life easier
$ export DISPLAY=":0" 
## Starting xterm to have a non-3d window open as reference
$ xterm &
## I will only post info about TV1 as all else is disconnected
## note that the display is setup for NTSC-M and 1024x768
$ xrandr --verbose 
TV1 connected 1024x768+0+0 (0x44) normal (normal left inverted right x axis y axis) 0mm x 0mm
	Identifier: 0x43
	Timestamp:  118579
	Subpixel:   unknown
	Clones:    
	CRTC:       0
	CRTCs:      0 1
	Transform:  1.000000 0.000000 0.000000
	            0.000000 1.000000 0.000000
	            0.000000 0.000000 1.000000
	           filter: 
	bottom margin: 37 (0x00000025)	range:  (0,100)
	right margin: 46 (0x0000002e)	range:  (0,100)
	top margin: 36 (0x00000024)	range:  (0,100)
	left margin: 54 (0x00000036)	range:  (0,100)
	mode:	NTSC-M
		supported: NTSC-M       NTSC-443     NTSC-J       PAL-M       
		           PAL-N        PAL          480p@59.94Hz 480p@60Hz   
		           576p         720p@60Hz    720p@59.94Hz 720p@50Hz   
		           1080i@50Hz   1080i@60Hz   1080i@59.94H
  1024x768 (0x44)   26.9MHz *current +preferred
        h: width  1024 start 1025 end 1088 total 1120 skew    0 clock   24.0KHz
        v: height  768 start  769 end  800 total  801           clock   30.0Hz
  848x480 (0x45)   14.5MHz +preferred
        h: width   848 start  849 end  912 total  944 skew    0 clock   15.4KHz
        v: height  480 start  481 end  512 total  513           clock   30.0Hz
  640x480 (0x46)   11.3MHz +preferred
        h: width   640 start  641 end  704 total  736 skew    0 clock   15.4KHz
        v: height  480 start  481 end  512 total  513           clock   30.0Hz
  800x600 (0x47)   17.0MHz
        h: width   800 start  801 end  864 total  896 skew    0 clock   19.0KHz
        v: height  600 start  601 end  632 total  633           clock   30.0Hz

## Start glxgears and see if it displays properly
$ glxgears
## For me it does, and after killing it with Ctrl-C I proceed 
## Becouse that my TV is a PAL tv I ofcourse want it to use it
$ xrandr --output TV1 --set mode PAL
## Starting glxgears again and visually confirm it works
$ glxgears
## It still displays properly
## Looking at xrandr --verbose I discovers that is does not any longer has *current for 1024x768
$ xrandr --verbose
TV1 connected 1024x768+0+0 (0x44) normal (normal left inverted right x axis y axis) 0mm x 0mm
	Identifier: 0x43
	Timestamp:  490284
	Subpixel:   unknown
	Clones:    
	CRTC:       0
	CRTCs:      0 1
	Transform:  1.000000 0.000000 0.000000
	            0.000000 1.000000 0.000000
	            0.000000 0.000000 1.000000
	           filter: 
	bottom margin: 37 (0x00000025)	range:  (0,100)
	right margin: 46 (0x0000002e)	range:  (0,100)
	top margin: 36 (0x00000024)	range:  (0,100)
	left margin: 54 (0x00000036)	range:  (0,100)
	mode:	PAL
		supported: NTSC-M       NTSC-443     NTSC-J       PAL-M       
		           PAL-N        PAL          480p@59.94Hz 480p@60Hz   
		           576p         720p@60Hz    720p@59.94Hz 720p@50Hz   
		           1080i@50Hz   1080i@60Hz   1080i@59.94H
  1024x768 (0x106)   22.4MHz +preferred
        h: width  1024 start 1025 end 1088 total 1120 skew    0 clock   20.0KHz
        v: height  768 start  769 end  800 total  801           clock   25.0Hz
  848x480 (0x107)   12.1MHz +preferred
        h: width   848 start  849 end  912 total  944 skew    0 clock   12.8KHz
        v: height  480 start  481 end  512 total  513           clock   25.0Hz
  640x480 (0x108)    9.4MHz +preferred
        h: width   640 start  641 end  704 total  736 skew    0 clock   12.8KHz
        v: height  480 start  481 end  512 total  513           clock   25.0Hz
  800x600 (0x109)   14.2MHz
        h: width   800 start  801 end  864 total  896 skew    0 clock   15.8KHz
        v: height  600 start  601 end  632 total  633           clock   25.0Hz
  1024x768 (0x44)   26.9MHz
        h: width  1024 start 1025 end 1088 total 1120 skew    0 clock   24.0KHz
        v: height  768 start  769 end  800 total  801           clock   30.0Hz
## What will happend if I reset it to 1024x768?
$ xrandr --output TV1 --mode 1024x768
## xterm still looks fine and has done all the time, what about glxgears?
$ glxgears
## And here the whole screen starts to spin vertically... 
## Killing glxgears and xterm displays fine again.