potential fix: adapter connected to USB hub
 

I have two MacBook Airs (one purchased about a month ago, the other in August) both running the 1.7 beta 3 driver on OSX Lion.

The DisplayLink adapter I have was connected to a powered USB hub and I found that whenever I plugged the USB hub into either machine, I would get inverted video (i.e. a psychedelic version of my wallpaper). The fix was to plug the DisplayLink adapter directly into the machine.

Hope this helps someone.

screenshots or it didn't happen! haha just kidding, great workaround however I already have my display hooked up like that.