Well Plippo proposed deleting the old 70-touchsreen-egalax.rules in /etc/udev/rules.d and then reinstalling the twofing package from the ppa in order to write a new one. This is the only fix that I tried and everything seems to have fixed up nicely, including the jumping cursor.
In reference to your question over KDE configuration, I haven't really configured it any different to my desktop. In that I switched off the netbook mode and went back to a traditional KDE desktop but with smaller interface elements to save screen space. I then use the KDE on-screen keyboard which is perfectly functional and I have the touchrotate options in the favourites of the Application Launcher.
My one gripe over using KDE would be KDM's apparent unwillingness to use an onscreen keyboard on login and lock screens, although I haven't checked yet to see if that was fixed in 4.8.
PS. Sorry about the delayed reply.