You appear to be running into a specific combination of hardware bug. It is already reported as LP Bug #783165 and I think it's caused by something odd in the EDID of your display that confuses the i915 driver. Make sure you mark yourself as affected in that bug report, subscribe to updates if you like and feel free to post a working workaround in the bug report. This could be useful for anyone else running into the same and hitting to the bug report rather than the Q&A here.
Workaround
There's this workaround I spotted on chrisnewland.com:
Use the xrandr command to get the detected modes
chriswhocodes@debian:~$ xrandr Screen 0: minimum 320 x 200, current
1024 x 768, maximum 4096 x 4096 VGA-0 connected 1024x768+0+0 (normal
left inverted right x axis y axis) 0mm x 0mm 1360x768 59.8
1024x768 60.0* 800x600 60.3 56.2 848x480
60.0 640x480 59.9 59.9
Note the name of the screen, here it is VGA-0 but yours may differ
Use the cvt command to get a Modeline string for the resolution you want (1280x1024)
chriswhocodes@debian:~$ cvt 1280 1024
# 1280x1024 59.89 Hz (CVT 1.31M4) hsync: 63.67 kHz; pclk: 109.00 MHz Modeline "1280x1024_60.00" 109.00 1280 1368 1496 1712 1024 1027
1034 1063 -hsync +vsync
Now copy everything after the word Modeline into the xrandr --newmode command
chriswhocodes@debian:~$ xrandr --newmode "1280x1024_60.00" 109.00
1280 1368 1496 1712 1024 1027 1034 1063 -hsync +vsync
Now add the mode to your screen
chriswhocodes@debian:~$ xrandr --addmode VGA-0 1280x1024_60.00
Now change to the new resolution
chriswhocodes@debian:~$ xrandr --output VGA-0 --mode 1280x1024_60.00
You should now be running at 1280x1024 but you need the next step to make it permanent
From here the posted workaround seems to be out of date. See this answer on how to make it permanent.