Store repaint rects in the coordinate space of their backing GraphicsLayer.

LayoutTests/compositing/squashing/add-remove-squashed-layers-expected.txt

 Test that layers can be nicely added or removed from a squashed layer, without unnecessary repaints on any layer. Click anywhere to test interactively; keep clicking to proceed through the test.
 
 CASE 1, original layer tree with overlap1 and overlap2:
 (GraphicsLayer
   (bounds 800.00 600.00)
   (children 1
     (GraphicsLayer
       (bounds 800.00 600.00)
       (contentsOpaque 1)
       (drawsContent 1)
@@ skipping 37 matching lines @@
               (bounds 400.00 400.00)
               (contentsOpaque 1)
               (drawsContent 1)
               (backgroundColor #808080)
             )
             (GraphicsLayer
               (position 140.00 140.00)
               (bounds 260.00 260.00)
               (drawsContent 1)
               (repaint rects
-                (rect 160.00 160.00 20.00 20.00)
                 (rect 80.00 80.00 100.00 100.00)
                 (rect 0.00 0.00 100.00 100.00)
+                (rect 0.00 0.00 100.00 100.00)

[leviw_travelin_and_unemployed, 2014/05/29 20:49:00]

I assume you've validated these are, indeed, correct?

[chrishtr, 2014/05/29 21:06:11]

Yes, checked them.

+                (rect 0.00 0.00 100.00 100.00)
               )
             )
           )
         )
       )
     )
   )
 )
 CASE 3, overlap2 gets removed. Since this does not resize the layer, there should only be a repaint of overlap2:
 (GraphicsLayer
@@ skipping 13 matching lines @@
               (drawsContent 1)
               (backgroundColor #808080)
             )
             (GraphicsLayer
               (position 140.00 140.00)
               (bounds 260.00 260.00)
               (drawsContent 1)
               (repaint rects
                 (rect 160.00 160.00 100.00 100.00)
                 (rect 80.00 80.00 100.00 100.00)
+                (rect 0.00 0.00 100.00 100.00)
               )
             )
           )
         )
       )
     )
   )
 )
 CASE 4, overlap1 gets removed:
 (GraphicsLayer
@@ skipping 47 matching lines @@
               (contentsOpaque 1)
               (drawsContent 1)
               (backgroundColor #808080)
             )
             (GraphicsLayer
               (position 220.00 220.00)
               (bounds 180.00 180.00)
               (drawsContent 1)
               (repaint rects
                 (rect 0.00 0.00 100.00 100.00)
-                (rect 0.00 0.00 20.00 20.00)
+                (rect 0.00 0.00 100.00 100.00)
+                (rect 0.00 0.00 100.00 100.00)
               )
             )
           )
         )
       )
     )
   )
 )
 CASE 6, overlap1 gets added back, and overlap3 gets removed:
 (GraphicsLayer
@@ skipping 17 matching lines @@
               (backgroundColor #808080)
             )
             (GraphicsLayer
               (position 140.00 140.00)
               (bounds 180.00 180.00)
               (drawsContent 1)
               (repaint rects
                 (rect 80.00 80.00 100.00 100.00)
                 (rect 0.00 0.00 100.00 100.00)
                 (rect 0.00 0.00 100.00 100.00)
-                (rect 0.00 0.00 20.00 20.00)
+                (rect 0.00 0.00 100.00 100.00)
               )
             )
           )
         )
       )
     )
   )
 )