With my ATI Mobility Radeon X300 I have the same problem.
I must choose using composite extensions or playing videos with the
fglrx drivers.
With the open drivers I can't use the Powerplay option and the fan is
active much time degrading the battery life, but videos and composite
works fine together.
So for now I use fglrx with no composite with this options in xorg.conf:
Section "Device"
Identifier "Configured Video Device"
Driver "fglrx"
Option "VideoOverlay" "on"
Option "OpenGLOverlay" "off"
EndSection
I tried a lot of configurations, but always with problems. Maybe the
video doesn't appear, or appear "pixelized" and using a lot of CPU, or
is in front of any windows...
Regards!.
--
[fglrx] xv output not available for video playback
https://bugs.launchpad.net/bugs/197639
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