Ok - I fell back to the nouveau driver and still had issues. Today I came across this: https://bugzilla.redhat.com/show_bug.cgi?id=475890
Long story short: X was moved from vt7 to vt1. Init is running a tty on tty1. That is what's been causing CPU utilization issues for xorg of late (at least for me).
I've attached a small patch to the above mentioned bug report that solves my issue ... although I haven't tried yet with the proprietary driver (as I moved to 2.6.32rc8 for other reasons).