I just tested this laptop and this bug is fixed both on the final
version of 7.10 (gutsy) and the latest nightly (Jan-09) version of
Hardy.

side note:
I did however notice that the graphical session went from automatically working 
on 7.10 to not automatically working on Jan-09 hardy, but I'll wait until the 
beta period happens to look into this further (since X.org is undergoing major 
changes.)

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[gutsy] [radeon x1400] no or corrupted (console) video output
https://bugs.launchpad.net/bugs/132590
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