Just do the steps from post #30, 16 colors should be enough for terminal :)
Now I'm with generic kernel from ubuntu, and workaround work, but my version of 
X is from xorg-edgers. 

Linux nb1210x86 3.5.0-22-generic #34-Ubuntu SMP Tue Jan 8 21:41:11 UTC 2013 
i686 i686 i686 GNU/Linux
X -version

X.Org X Server 1.13.2.902 (1.13.3 RC 2)
Release Date: 2013-02-28
X Protocol Version 11, Revision 0
Build Operating System: Linux 2.6.24-32-xen i686 Ubuntu
Current Operating System: Linux nb1210x86 3.5.0-22-generic #34-Ubuntu SMP Tue 
Jan 8 21:41:11 UTC 2013 i686
Kernel command line: BOOT_IMAGE=/vmlinuz-3.5.0-22-generic 
root=UUID=2e3a77d9-287c-43db-8910-49892bb5df8d ro nomodeset quiet splash 
vt.handoff=7
Build Date: 01 March 2013  10:31:01PM
xorg-server 
2:1.13.2.902+git20130301+server-1.13-branch.4d98c7da-0ubuntu0ricotz~quantal 
(For technical support please see http://www.ubuntu.com/support) 
Current version of pixman: 0.28.2
        Before reporting problems, check http://wiki.x.org
        to make sure that you have the latest version.

With kernel from xorg-edgers (Linux 3.7.0-7-generic) works too.

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https://bugs.launchpad.net/bugs/1029790

Title:
  Can't boot without nomodeset option-kernel 3.5.X.X/3.6.X.X ATI M52
  [Mobility Radeon X1300]

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