This problem is easy to reproduce:
open rdesktop connection to any windows workstation, start cmd.exe on remote machine then execute any command that causes intensive console output (something like dir /s /a /v c:\windows). Then you will see that your linux host became unusable - one CPU core is 100% used, all became slow, even keyboard input. Sometimes even mouse cursor may freeze for 1-5 seconds!

I'm not sure that it's X bug, but I think that usual application should not be able to make such disaster for the whole system.

I'm using Core i5 750 CPU with 4GB of RAM, here is lspci output for my graphics adapter:

01:00.0 VGA compatible controller: ATI Technologies Inc RV710 [Radeon HD 4350] (prog-if 00 [VGA controller])
	Subsystem: PC Partner Limited Device e106
	Flags: bus master, fast devsel, latency 0, IRQ 36
	Memory at e0000000 (64-bit, prefetchable) [size=256M]
	Memory at f7de0000 (64-bit, non-prefetchable) [size=64K]
	I/O ports at c000 [size=256]
	Expansion ROM at f7dc0000 [disabled] [size=128K]
	Capabilities: [50] Power Management version 3
	Capabilities: [58] Express Legacy Endpoint, MSI 00
	Capabilities: [a0] MSI: Enable+ Count=1/1 Maskable- 64bit+
	Capabilities: [100] Vendor Specific Information <?>
	Kernel driver in use: radeon

My system is gentoo linux (Linux core 2.6.34-gentoo-r11-00 #2 SMP PREEMPT x86_64) with the following software installed:

[I] x11-base/xorg-drivers (1.9@09/20/2010): Meta package containing deps on all xorg drivers
[U] x11-base/xorg-server (1.9.0.902@10/23/2010 -> (~)1.9.1): X.Org X servers
[I] x11-misc/xorg-cf-files (1.0.3@06/09/2010): Old Imake-related build files
[I] net-misc/rdesktop (1.6.0@10/23/2010): A Remote Desktop Protocol Client