At late september I did a short workaround to get radeon work on 7.10 final 
release: 
I installed gutsy tribe 5, activated ATI restricted drivers and then I upgraded 
to final 7.10. Disabling ATI drivers worked fine.

My installation is working since that time with all updates, and no
problems with radeon driver at all.

-- 
gutsy beta: xserver failed on laptop with ATI RV350 [Mobility Radeon 9600 M10] 
[1002:4e50]
https://bugs.launchpad.net/bugs/145646
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