I can verify Gabriel Cuka's comment - renaming that directory allowed
both the repository fglrx package and the ATI-sourced package to
install.

Renaming the /usr/lib/fglrx directory also fixed two installation
warnings about subdirectories not being able to be deleted.

Neither of these two steps, however, resulted in a functioning driver.

I wonder whether it's a kernel issue, since my display is garbled on
startup as well. Full 1440x900 resolution without acceleration when in
X, but the startup splash screen is garbled beyond recognition.

Ubuntu 10.04 x64, upgraded, ATI Radeon HD 5770

-- 
package fglrx (not installed) failed to install/upgrade: subprocess new 
pre-installation script returned error exit status 1 - inst_path_default or 
inst_path_override does not exist in /etc/ati  when ATI Drivers are previously 
installed
https://bugs.launchpad.net/bugs/565407
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