Yes, DRI is enabled:
(II) RADEON(0): Direct rendering enabled
So does the 6.7.195+git20071020tv version solve your issue?
** Changed in: xserver-xorg-video-ati (Ubuntu)
Sourcepackagename: None => xserver-xorg-video-ati
Assignee: (unassigned) => Tormod Volden (tormodvolden)
Status: New => Incomplete
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ATI Driver 1.6.7.195 Opensource Gets Black Screen on Radeon 9600 RV350
https://bugs.launchpad.net/bugs/154586
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