I'd not be happy with removing that - XrandR solves some problems and introduces others - namely that the desktop panel applets/icons etc rearrange themselves for the lower resolution then sometimes don't rearrange back.
But is what 'real' Windows does (as it sometimes messes also my Windows desktop when doing it :-) ).
Using XVidmode has the advantage that the desktop size doesn't change, only the screen resolution (which is what we want) but has the disadvantage of enabling the hardware panning/sideslip stuff, which is what we don't want.
I once investigated the way to 'lock' the address of the displayed frame-buffer in X11 by extending the XVidMode extension. And it's basically not doable easily as this scrolling is done in a very low level of the X11 code and would need a big amount of code to do properly.
This whole 'DXGrab' issue is a bit messy (and even with a full-screen winedesktop mode we won't fix all these issues easily as we will still have the XGrabPointer issue).
Lionel