I have hunted up my ancient Geforce2MX and am currently using it instead.
It works *fine*. The lag is gone. CPU usage no longer spikes up to 100% every couple seconds. It no longer bogs down into the strange state where CPU usage approaches 100% and sdlgears drops to <5FPS.
In fact, I am currently typing in Konqueror, playing music in XMMS, scrolling text in a console window, and running sdlgears at the same time. This would have been unthinkable when using the graphically-superior FX5200. So it is pretty clear to me by this point that the nvidia Linux driver has serious issues with the GeforceFX5200. I would greatly appreciate a response from nvidia on this, any response at all.