This appears to be the same issue as I just got. I posted it here:
http://displaylink.org/forum/showthread.php?t=64599
It seems to be a problem with compositors which partially update the framebuffer (only updates changed areas, not the whole screen), specifically MESA_copy_sub_buffer and possibly equivalents. Does DisplayLink do anything special with the mouse cursor?
Edit: this issue also occurs with the compositor turned off entirely. The issue does not occur when telling the compositor to refresh the whole screen constantly (which pretty much kills displaylink performance)