try 'nomodeset' and 'radeon.modeset=0' with the recovery option in grub,
a bit later select to use the low resolution for the current session and
then, when you are in gnome, install the ati proprietary hardware
driver.  after that, everything worked fine for me.

-- 
[lucid] ATI hd5xxx cards wrongly doing kms?
https://bugs.launchpad.net/bugs/560306
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