Technically it should work for you as your monitor is properly reporting back
the supported modes up to 1680x1050.
Try adding
Option "Monitor-LVDS" "Configured Monitor" to the Device section of
your xorg.conf.
Note: This takes a little time as you have to get the DisplaySize and set
resolution this way.
I was told a bug existed in Xserver 1.3.0 which causes problems with certain
LCD/digital monitors and the ATI 6.8.0 driver which is fixed in Xserver 1.4.2
and higher. So await the upcoming Xorg 7.4 update.
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