I got this result under Ubuntu 7.1, using both the free and proprietary ATI
xservers.
 

Create a text file under writer.  Make it a couple of pages.  You can use the
default style and just paste in a bunch of Lorem Ipsum.

Go to the Format menu, and pick page.  Set the background to be a png.  I used a
semi-transparent watermark.  I also used Area as the Type, but this works under
Position, as well.

Now click ok.  You have a lovely background image under your text.

Open a terminal window, and execute "top".  Hit "M" to sort by memory.  Xorg
will take about 30 megs, depending on your options loaded and how much else you do.

Scroll up and down through the text.  Up and down, up and down.  Watch the xorg
memory footprint get bigger and bigger.  Keep doing it for several minutes, and
ultimately you'll fill memory with xorg.  You'll start paging, then you'll bog down.

If you show restraint and stop filling memory before your machine becomes
unusable, you can quick openoffice.org and VOILA! all that memory gets freed out
of xorg.

This issue renders background images unusable in a document you're trying to edit.