Good news, at least for me... 
Now with the latest Jaunty bugfix updates and using kernel 2.6.29.1 from the 
Ubuntu Mainline Kernel repository my system now runs with DRI and Kwin 
Composite enabled... This did not work before...
Allthough using the 2.6.28.XX Kernel from Jaunty still fails.. 
Can you try this to see if it works for you too?

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[RV250][JAUNTY]  X Freezes with Radeon driver EXA/XAA Composite
https://bugs.launchpad.net/bugs/348332
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