I have set "dim display" in the powerdevil settings but it doesn't work. Moreover, when I try to adjust brightness from the "battery settings" widget (Kubuntu 10.10), nothing happens. I can adjust brightness just fine when I use keyboard shortcuts (fn + brightness keys).

Is this a HAL problem? Might it be different using upower?

The battery settings widget works fine here, and PowerDevil can change the brightness (it does when I unplug the power for instance). This however may be due to fixes after the KDE 4.6 Beta 1 release.

When I unplug from AC powerdevil adjusts the brightness correctly here too. Likewise when I plug into AC. I read somewhere that what controls THAT is not powerdevil but something different.

I just did a test and my screen was dimmed after the period I specified in PowerDevil settings. You may need to re-specify your settings in the PowerDevil KCM to help them stick.

I thought you said you're using KDE 4.6 beta 1 though, which I thought uses upower, not HAL. So you might see different results from me since I'm using KDE 4.5.3.

Also, I've already tried what you suggested and even changed the values manually in powerdevilprofilesrc to no avail.

As PowerDevil was rewritten in KDE 4.6, this issue may have been fixed then.

I just updated to Kubuntu 10.10 KDE 4.6 beta and the power management backend being used is still HAL according ot "Information Sources" (in System Settings). Shouldn't it be upower?

Both UPower and HAL are in use. If your distribution compiled without HAL, or HAL was unreachable, then it will fallback to UPower/UDisks/UDev. If HAL is available, it will be used first though.