Thanks for that Jira link. I'm still having the same problem in the LL viewer and Emerald (and I can recreate it every time by camming around in a busy area), and disabling VBO helps at the cost of maybe 2 fps in performance, so it seems worth it.
Now, I did try to download new drivers from ATI, and not sure which version they were, but the moment I logged into SL the VBO bug went ballistic and was a hundred times worse than before. So, if you ask me, don't update your ATI drivers as I don't think they fixed anything at all on their end. Stick with the VBO toggle and save yourself a lot of headaches.