Well, I need that laptop for work, so I had to reinstall 12.04. However,
before I did so, I did test the latest "stable" kernel (3.6.3 quantal)
and I also updated xorg from xorg edgers ppa (as there was nothing to
loose). Neither update fixed the problem.

I can only do additional tests that can be performed while running 12.10
from the LiveCD.

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https://bugs.launchpad.net/bugs/1071709

Title:
  Radeon with X1350 no longer working in 12.10

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