6) Sabayon Linux Development Version 4 uses X.Org 7.4 and has ati-drivers 8.11 on entropy's repository: http://packages.sabayonlinux.org/
There may be others but these are the ones I found... so for some reason it doesn't work on paldo... We might not know now... but this is an specific paldo problem or it would work patchlessly on other distros...
Maybe release 8.12 will tell us whats wrong...
.............................. OSs: Paldo-testing x86_64 :: HP Pavilion dv9680ez