I have the same thing on my iBook. Radeon 9550 here, an I *know* it works with 
r300. I had it working in another distro (gentoo) with vanilla kernel and xorg 
- no special patches. Not sure what's wrong here. maybe drm version is too old ?
What I get in dmesg is:

[   85.949668] [drm] Initialized drm 1.0.1 20051102
[   85.995517] [drm] Initialized radeon 1.24.0 20060225 on minor 0
[   87.118258] agpgart: Putting AGP V2 device at 0000:00:0b.0 into 4x mode
[   87.118272] agpgart: Putting AGP V2 device at 0000:00:10.0 into 4x mode
[   87.198209] [drm:radeon_do_init_cp] *ERROR* Cannot initialise DRM on this 
card
[   87.198218] This card requires a new X.org DDX

-- 
[Radeon 9200] [Mac Mini (powerpc)] drm fails to initialize the radeon module, 
consequently direct rendering is disabled.
https://launchpad.net/bugs/47762

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