I have KDE 4.3 running with 3 displays and all is great, except I cannot enable desktop effects, It says :

Compositing is not supported on your system.
Required X extensions (XComposite and XDamage) not available.

Xorg log says :

(II) NVIDIA(0): Support for GLX with the Damage and Composite X extensions is
(II) NVIDIA(0): enabled.

and this comes up as well :

(II) Initializing built-in extension RANDR
(II) Initializing built-in extension COMPOSITE
(II) Initializing built-in extension DAMAGE


and this :

(**) Extension "Composite" is enabled


Why doesn't KDE use it ??

Do you have xinerama enabled? Afaik it replaces the XRandr extension (which is needed by compiz) because XRandr only supports multihead with separate Xscreens. I think you will have to configure your settings (if you have nvidia with "nvidia-settings") to 2x twinview if you have 4 monitors (I've never tried it with 4 Monitors and I don't know whats the ATI feature called for twinview) or 1x twinview and 1 separate X if you have 3 screens to enable compiz.
Best regards Richy