Well, I'm surprised. I can reproduce this pretty consistantly on all configurations I've tried. I haven't tried on Rage hardware, but I have on Radeon.
The only thing I can think of to fix this would be to wrap each Paint event's code in a Try block, and when this particular exception is thrown, ignore it. This might make sense either way, since any unhandled exception that occurs in a Paint event is a particuarly bad thing. I could be wrong here, but there's not really much of a performance hit from using a Try block unless an exception is actually thrown, right?
That said, I fully understand if this isn't doable; I don't expect you to make such a change based on one bug report you can't reproduce.
The weird thing is that Microsoft is entirely aware of the problem, knows it is impacting customers, and refuses to fix it. I don't mean they can't get a fix for this particular bug in to the next release, I mean the entire team responsible for GDI+ is not taking any more bugfixes whatsoever.
Which sucks.