This is regression. 2:2.17.0-1ubuntu4 works fine.
I use xorg-edgers ppa for testing.
kernel 3.5.0-6-generic #7~edgers2-Ubuntu 64bit
Vendor: 0x8086, Device: 0x0116, Revision: 0x09 (??)
Currently i use unity-2d because of other bug. If i play some video with mplayer (default video output - xv) then i get flickering window. See attached video.
hier is video displaying this issue http://youtu.be/nCzUAcmO-QA
No it is not a regression, it is lack of the ability of the hardware to do what you ask.
*** This bug has been marked as a duplicate of bug 37686 ***