Tested on 2.6.20-4 with the "radeon" driver and yes, it works. For what it's worth, it does work fine with the "fglrx" driver back on 2.6.19-7, but not since then.
Any other information that would be helpful on this bug?
** Changed in: linux-restricted-modules-2.6.20 (Ubuntu)
Status: Needs Info => Confirmed
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GDM gets stuck at login
https://launchpad.net/bugs/77957
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