powerbits - asking open ended questions like the first line is not going to get you anywhere.... you wouldn't expect someone to sit down and type out every change that has been implemented since you last looked would you? Especially, when all this information is available on the wiki and forums if you were to do some searches.
To your specific questions - LMCE 0710 uses Kubuntu 0710 (as you would expect) and LMCE 0810 (once released, its in Alpha testing currently) will use Kubuntu 0810. Once this major upgrade is complete, certain significant changes will mean that the normal online upgrade system will be available again, and much of the public OSS projects being used within LMCE will be the normal code, meaning that upgrading to the next version of Kubuntu along with LMCE will be massively easier. And upgrading just the kernel (for hardware support) should be very straight forward even without any Kubuntu/LMCE upgrades.
The video tearing issue should only be an issue if you use UI2 with Alpha Blending, not UI1 or UI2 with Masking, this was always the case, and remains so in 0810 as it is fundamentally tied to the nVidia drivers, which are not open source, so there is precious little we can do about it. Reporting the issue to nVidia will be met with deafing silence... I've tried twice and I know others have as well, and I don't believe anybody has ever had a response!