Before I forward this upstream, one thing to check.  You mentioned
having tried with -fglrx; there is a known issue where leftover bits of
fglrx can interfere with -ati and cause it to fail, with symptoms not
unlike what's described in this bug report.

Can you please follow the steps at
https://wiki.ubuntu.com/X/Troubleshooting/FglrxInteferesWithRadeonDriver,
see if the issue still exists, and report your findings here?

** Changed in: xserver-xorg-video-ati (Ubuntu)
       Status: Triaged => Incomplete

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[HD 3650] white screen before login screen
https://bugs.launchpad.net/bugs/267185
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