Tim,
At thousands of colors all sorts of weirdness appear in CU.
For normal modeling things are fine, but when I pan, the screen changes color and splits in half. The image on the left is the working model, the image on the right comes from the last model file I was working on. The right hand model file was not open.
If I quit and try and re-start CU in thousands of colors it crashes on startup (crash report emailed to you directly).
Changing the resolution of the display is not a usable option as at anything other than native resolution, the LCD display is too blurry to be usable. I have not attempted using just one display.
Starting in millions then changing to thousands the tearing / blocking still reappeared with dynamic shading set to either phong or gouraud after opening and closing many layers, copying items to new layers and then panning. The tearing always starts while panning. With dynamic shading set to Gouraud it was several hours before the tearing appeared, with Phong it usually starts after 30 - 45 minutes of use.
I reverted to my 10.5.2 backup disk, and everything has returned to normal. No tearing after 8 hours of use, that points to a driver issue and not hardware.
A Google search revealed that the 10.5.3 update that included many graphics bug fixes has had the same effect for many people when using OpenGL intensive applications and some ATI cards.