PROBLEM SORTED, NO MORE JITTER !
Update after visit to Apple store.
They plugged in Ethernet for local hardware test, no faults found.
After a few more tests, the suggestion was to backup everything, erase the HDD, and do a clean install of Mountain lion 10.8 using the USB recovery stick I had made earlier, using how to on the internet.
http://www.redmondpie.com/how-to-create-a-bootable-os-x-mountain-lion-usb-drive- dvd-sd-card-the-easy-way/
Success, all jitter has gone !!
Same problem here, Mountain Lion, iMac purchased Feb 2012 ... 2.5ghz Intel Core i5
Main problem, I have top right hot corner set up, to show desktop.
When the open windows clear right, they jitter like crazy, and the same in reverse.
But .... it has stopped doing it since I started this reply !!!
All I did was enable cookies, and have System Prefs open to check hot corners.
It's back again now !!
Using Camino, effect is still there, but less pronounced using Safari.
Starting up in SAFE mode seems to remove the jittering (Hold Shift key at startup)
But screen refresh is noticeably longer, much longer
So now I going to test out all my login items.
OK, installed them all one by one, no jitter.
Must be an non-essential kernel extension that is not loaded in safe mode.
I rang up Apple Support (90 day support as have installed ML) and after rebooting several times with various options, I am now booked into my local Apple Store for service to try & trace the fault.