I think I have seen & misplaced a message saying this bug is corrected.
There is a change in 8.04 beta regarding it indeed.
But the problem got worse, I'm afraid.

(1) Desktop Live CD still starts in line mode, not character fullscreen.
(2) After boot progress bar screen disappears
   - Either the computer hangs
   - Or the computer reboots
After the cursor got to top left and the display was programmed in some video 
mode.
Pretty much the 7.10 situation I described.

After installing the system, (2) occured everytime it booted.
So, I booted in recovery mode and launched X recovery.
System restart was then all-right in 800x600.
I patched the above Device, Monitor and Screen sections in xorg.conf.
Rebooted and the system runs fine in 1024x768 again.

If the correct fix cannot be found in time fr 8.04, better regress a fix
for this.

I attach all xorg.conf files left behind by the system and mine.
$ diff xorg.conf.*5 xorg.conf.*4
32a33
>       Option          "UseFBDev"              "true"


** Attachment added: "xorg.conf.20080328220615"
   http://launchpadlibrarian.net/12955742/xorg.conf.20080328220615

-- 
VIA/S3G VT8623 [Apollo CLE266] display no longer works
https://bugs.launchpad.net/bugs/197514
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