I have a machine with a Intel 82845G with the same problem.

I was able to fix this by changing the setting for the amount of shared memory 
for the card from 1024K to 8192K in the BIOS.
 
On mine, you boot into the BIOS, go to the 'Devices' menu, choose 'Video 
Setup', then change 'Shared System Memory' from 1024K to 8192K.

Once I did that, the boot worked normally and I was able to select
resolutions other than 640x480 in X.

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console fonts are too large i915
https://bugs.launchpad.net/bugs/99645
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