It would be nice if you could try Ubuntu 8.04 LTS development version's
live CD and see if this problem is finally fixed. For example the
current one is at: http://cdimage.ubuntu.com/ports/daily-live/20080310
/hardy-desktop-powerpc.iso

The link will be gone in a few days, after that the latest one can be
found in subdirectories of http://cdimage.ubuntu.com/ports/daily-live/

Ubuntu 8.04 has a new 6.8.0 version of xserver-xorg-video-ati, which has
a very large number of bug fixes etc.

-- 
Live CD boots to a black screen on Blueberry G3 iMac
https://bugs.launchpad.net/bugs/22976
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