Finally, I have the solution for this.
It's related to GLX somehow. I don't know much about this stuff. Anyways, check out this site:
http://xf4vnc.sourceforge.net/
I downloaded an executable from there. It's a replacement for /usr/bin/Xvnc. I simply renamed Xvnc to Xvnc-old and dropped the new one in (naming it /usr/bin/Xvnc -- imagine that). That's it! I did nothing else.
The new Xvnc is about 3MB compared to 1.3 for the original. Now everything on the remote desktop looks perfect -- exactly like the real thing. All the fonts show up perfectly now.
Hope this helps someone.
Apollo