Comment 45 for bug 459647

If you can't wait for this to be fixed upstream, here's a step-by-step guide of how to fix based on d.a.'s description (thanks d.a.!) for those not familiar with modifying and re-building things from source.

1. Make sure you have apt-src installed [sudo apt-get install apt-src].
2. Checkout the compiz-core source [sudo apt-src install compiz-core], this may take a while.
3. Find the relevant file, and modify it accordingly. [sudo vi compiz-0.8.4/debian/patches/013-add-cursor-theme-support.patch].
3a. Modify lines 133, 135 and 136 to change "core.xml.in" to "core.xml.in.in" and save.
4. Rebuild the package [sudo apt-src build compiz-core], this may take a while.
5. Install compiz-core over existing version [sudo sudo dpkg --install compiz-core_0.8.4-0ubuntu15_amd64.deb] (note I'm on 64-bit system, so filename may be different for you, but you should only need to replace the core one, not the others).
6. Refresh compiz. I just did Alt+F2 [metacity --replace], then Alt+F2 [compiz --replace].

..and you're done! Mouse cursor and size should now reflect what you have set in your preferences.

Massive thanks to d.a. for figuring all this out!