I'm reluctant to post this latest problem because I know it is documented in the README and I've seen others post about it on this board.
Now that I've re-downloaded the 3123 driver I cannot see any evidence suggesting that driver components were compiled with gcc v2xx. Having said that, I don't see anything that tells me the closed source Nvidia pieces are compiled with gcc v3.2, but I will assume it.
The open source Nvidia pieces are 3.2 compiled.
My Linux kernel is 3.2 compiled.
Xstart dies on "failed to allocate lut context dma".
On another note, I downloaded 2960 and "readelf" on the Module_nvkernel had a bunch of gcc2_compiled. Having this problem in 2960 seems more reasonable to me than in 3123.
I'll keep my expectations low for help on my "failed to allocate" error and I'll keep my fingers crossed for an interlace fix in the next driver release.