So first off if you haven't already, Install Snow Leopard, and upgrade to 6.7 (you need to be on 10.6.7 or else this won't work). If you get a kernel panic from an ATi related thing, do this.
Boot with -s, and do the following commands:
/sbin/mount -uw /
rm -r ATI*
rm -r natit.kext*
Reboot with -f -v.
Now use Kext Helper and install my pack that you can download at the end if this post, then run Kext Utility (or repair permissions in Disk Utility) to repair the permissions. After that is finished, in that pack is a folder called ChameleonRC5. Inside that folder is a file called 'boot.' Drag that to the hard drive you boot from, be it the EFI partition or your root partition. Now find your com.apple.boot.plist file (in EFI or Extra, not sure what you have.) and add this to the bottom:
<key>GraphicsEnabler</key> <string>Yes</string>Reboot with -v -f to make sure it recognizes the card, and enjoy graphics. If you have any problems, please post here and I'll try to help you. I'm not exactly an expert on this. I just know that this worked for me.
Great thanks to:
Netkas (for binary patched ATIRadeonX2000.kext)
aonanodad (for getting this to work in the first place.)
GraphicsPack.zip 6.68MB 524 downloads