Good news: I have a had a small eureka moment that results my computer
fully booted with graphics hardware fully accelerated. Bad news: it is
still a workaround -- I still can't push power button and boot up
normally.

Here is the workaround sequence -- it requires another computer that can
ssh in:

1. Computer in OFF state, press power.
2. At boot select screen, press `e` and edit kernel line by appending 
`modprobe.blacklist=radeon`
3. Press `F10` to boot
4. At login screen, click gear icon in upper right and select `Suspend`
5. After computer is in suspended state, press any key to awaken.
6. The display does not "reawaken" and still appears off.
7. From another computer, ssh into the first.
8. Issue `sudo service lightdm stop`
9. Issue `sudo modprobe radeon`. This should succeed! \o/
10. Issue `sudo service lightdm start`

Now the computer should be using correct drm drivers and have full
resolution display. Furthermore, Suspend and Wake work successfully.

I discovered this using ubuntu mainline kernel 4.8.0-rc5 but have
verified it works with mainline 4.8.6 and also with 4.4.0-45.
Unfortunately, I am also using the oibaf/graphics-drivers PPA with more
recent mesa and libdrm drivers. I plan to test again after removing the
PPA but it may take a while. If anyone with this problem is still
watching, I'd be curious to hear if my workaround steps work for you.

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https://bugs.launchpad.net/bugs/1568429

Title:
  1002:68b8 Radeon won't work with KMS enabled

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