this report has been filed here:

https://bugs.edge.launchpad.net/ubuntu/+source/gnome-panel/+bug/621024

"This is on a fresh laptop, using a fresh 10.04 and a dual screen configuration.
On this new machine, the laptop resolution is 1440x900, versus the external monitor's 1280x1024.

So, the main monitor's vertical resolution is lower than the external's.

To maximize use of the main screen's limited vertical resolution, I am setting the bottom panel to "autohide".

Unfortunately, in this configuration, it becomes quite impossible to use the panel. When migrating the mouse to the bottom edge of the screen, the panel will correctly show, then disappear. In most cases, it will start oscillating "show-hide-show-hide...", even though the mouse is not moving. If you keep going down, it will eventually not show anymore, until you move the mouse up again.

To be able to keep it in view, you have to precisely position your mouse cursor at just the right place, quite a usability issue.

I think this has to do with the fact that the vertical size of the virtual display is set to 1024 (highest monitor), which is bigger than the vertical size of the monitor where the panel resides. And since I line up the top of the two monitor when setting up the dual displays, there is effectively a virtual area that exists at the bottom of the main screen, where the mouse is allowed to travel. This causes the weird behaviour.

I am unable to determine if this is really a gnome-panel bug ("show if we are BELOW the panel") or an X bug ("do not allow the mouse to travel below the bottom of this screen, even if the virtual area is bigger").
"