I also experience this bug on ATI Rage Mobility M1 with a very similar XOrg.log.
On lubuntu 14.04 it causes lightdm to enter an infinite loop, can't even login 
graphically.
I think this is the corresponding upstream bug, which has been fixed.
https://bugs.freedesktop.org/show_bug.cgi?id=70556
Could we get this package updated accordingly?

** Bug watch added: freedesktop.org Bugzilla #70556
   https://bugs.freedesktop.org/show_bug.cgi?id=70556

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https://bugs.launchpad.net/bugs/1317252

Title:
  Mach64 X11-driver crashes apps on launch

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