I am using linux-image-2.6.32-21-generic 64bit.
When the grub menu loads (you need to hold shift after the bios screen), I select my kernel image and press 'e' to edit the boot parameters. At the end of the line beginning with "Linux" I append the option "i915.modeset=0". Turns out I can omit the "xforcevesa" option. On my system the modified line looks like this:
Then you press ctrl+x to boot with the modified parameter.
linux /boot/vmlinuz-2.6.32-21-generic root=UUID=3c809b01-30e9-434d-8dc8-96adf09007b1 ro quiet splash i915.modeset=0
To make the change semi-permanent (it will last until a kernel update), I added the "i915.modeset=0" to the appropriate line of the the kernel's main menuentry section in /boot/grub/grub.cfg. Apparently this is not how to alter the boot menu properly, but it works for me.
To install 10.04 from the regular livecd you will have to similarly modify the boot parameters of the installation media. I believe I did this by pressing F6 and then Esc from the live cd main menu.