@Manoj: With the new kernel I still get the blank screen when using
plymouth.

Booting with radeon.modeset=0 now shows me the plymouth text-mode
progress bar, which I wasn't getting before, but still comes up with a
corrupted screen.

-- 
[lucid] desktop runs out of video memory on ATI Radeon Mobility 7500
https://bugs.launchpad.net/bugs/507148
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