I found a workaround by compiling the very latest CVS sources of the rt2x00 driver (http://rt2400.cvs.sourceforge.net/rt2400/source/rt2x00/ the same as used in the latest Feisty kernel) and I had my RT2500 PCI working correctly on 2.6.20-11 (both generic and lowlatency, on a 32 bit x86 machine) after removing the original driver. Probably the developers added a fix recently, it works even with NetworkManager, at least for WEP. I'm attaching the output of lspci (sorry I can't provide a dmesg log as the box is running Edgy at the moment, I'll do it later).
** Attachment added: "RT2500 lspci" http://librarian.launchpad.net/6851492/rt2500_lspci.txt -- RT2500-based wireless G network card cannot be set or reset on 2.6.20-11 https://launchpad.net/bugs/92742 -- ubuntu-bugs mailing list ubuntu-bugs@lists.ubuntu.com https://lists.ubuntu.com/mailman/listinfo/ubuntu-bugs