I spoke with someone at HP about this and he told me to uninstall the ATI driver and re install it.
when I uninstalled the driver I noticed an immediate change in the screen's gradient contrast! i think I now know why Randomacts didn't see any thing wrong in my screen shot. Its the ATI GPU or driver!
I also have this same issue on my HP tm2t with the ATI Mobility Radeon HD 5450. On dark colors, you can really see a "blocky" effect. You can see it on the OPs screen shot. I uninstalled the drivers and reinstalled them, but no change. When I run the integrated graphics, I don't see this effect.
I tried updating drivers from ATIs website but it says they can't be downloaded due to incompatible hardware/software....version of graphics adapter is not supported.
I sent my laptop in for HP to "repair" it and when I got it back all they did to it was a software reset. basically, they sent me back my laptop with a factory restore of the hard drive but that did NOT fix the issue. I emailed them the same day letting them know and they just told me to send it back again for repairs, which I find to be a big hassle since I need my laptop for school.
I did the same thing you did and got the same results. really bummed about having a "better" GPU that performs worse than the integrated graphics.....
what's strange is I can't update the drivers from ATIs website. This issue is pretty annoying. I was looking forward to doing stuff like streaming HD video to my TV, but it looks terrible using the ATI card and the integrated graphics look ok but can't handle it for long without getting choppy.