A very easy work-around is to append "vga=795" as a kernel parameter in
/boot/grub/menu.lst, e.g. in the line directly after "...ro quiet
splash" if you have a 1280x1024 display. Take an appropriate other value
for a different screen resolution (773 for 1024x768). This enables the
frame buffer mode for the mga driver. Unfortunately, this hack does not
activate 3D graphics (mga_hal or something like that).

This has been tested on a Matrox G450 card and allows you a reasonable
"xvideo" output in VLC.

I hope that a new, fixed package "xserver-xorg-video-mga" will be
available soon.

-- 
Edgy upgrade breaks multiple Matrox cards
https://launchpad.net/bugs/58721

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