I was having the exact same problem on a Dell Inspiron 1501. It seems to be a problem with the display driver in the kernel. However, there is a work-around:
As you already mentioned, the notebook is booting and fully functional, it's just the screen that is not working correctly. If you disconnect the notebook from AC and wait until it goes into screen suspend mode (screen off, probably 5 minutes) and then wake the screen up again by pressing a key, the screen is working correctly. You can also try to close the lid, wait a few seconds ans open it again but that only works once logged in.
So, you could configure the time before shutting off the screen at 1 minute and automatic login, but you can also run a script at startup:
In Ubuntu / Mint etc:
Make sure you have automatic login enabled (sorry if that's a draw-back, but this trick is only working after the user is logged in...)
edit the fle /etc/rc.local as root
Insert the following lines at the bottom, above the very last line (exit 0):
That's it. Reboot and you'll still see the grey / white screen at startup, but after the system logged you in and starts X-windows your screen will switch off for a second and wakes up again. Works great and you can leave Grub as it is and have max sreen resolution.
xset dpms force suspend
xset dpms force on