Got this tip from the new tome 'Mac OSX Unleashed':
Sometimes when toggling between Classic and X, you might notice a jagged, not fully redrawn desktop around the dock area.
The problem as I understand it is that you are seeing the 9.X desktop pic during the switch. The solution: simply make sure your desktop pic is the same in both environments.
[Editor's note: I haven't experienced this behavior on my machine; Classic to X and back are smooth, and there's definitely no way I have the same desktop pic, as I have mine set to rotate in OS X. Still, if you're having this problem, this is a potential solution.]
Mac OS X Hints
http://hints.macworld.com/article.php?story=20011227202653714