Ha, figures! 😛
Standing in the space of 2 blocks that were broken but still visible. Moving into the affected space creates an x-ray.
Newly placed dirt block, block is invisible for 2-10 seconds.
Can confirm for 14w29a, 14w29b. Affects instances on computer with and without OpenGL capability. Broken blocks do not vanish and create an x-ray effect when occupying their space. Placed blocks are invisible except for their outline. Water poured from a bucket does not appear, but particles and any item drops (seeds, etc) are shown. Torches placed in a dark space do not light up walls, but do light up mobs, chests, etc. Breaking a block within the torches light sphere fixes the lighting. Hitting F3+A to manually refresh chunks helps but as soon as you enter a new chunk the process must be repeated.
I am not experiencing much lag except when entering brand new chunks.
Confirmed for 14w29b, just happened for the first time while trying to dock on half slabs. Very frustrating that the boats are nearly impossible to exit in any way without either destroying the boat, shooting it off into the ocean or dying instantly! This issue seems to have been around for a long, long time.