So, this seems to only be an issue with newer builds of DisplayFusion, because I've been using the product for over a year now and this just started happening.

Long shory short: if I switch from one monitor profile to another, dwm.exe starts using massive amounts of CPU, Aero effects grind to a halt, and Windows detects the problem and offers to turn off desktop composition. The only way I can get smooth aero effects back at this point is to reboot the system.

Here is the funny thing: if I use Windows Display Properties to change from one to two monitors, the slowdown effect does not happen. It ONLY happens if I use DisplayFusion to adjust the monitor profile-- using regular old Windows to enable the second/third/forth monitor does NOT cause the dwm.exe slowdown.

Well, nevermind. It started happening again even though I didn't change video modes. Not sure what is going on.