Seeing same behaviour myself. My "stretched" image displayed just fine across both monitors (1680x1050 each) in KK but now the best I can do in LL is "span" which spans the image across the monitors, but leaves bands at the top and bottom of the display where the image isn't tall enough to fill, vertically.
Oh, and btw, the white on grey color scheme is ugly, ubuntu. I had it looking fine. You really didn't need to change that.
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