I updated the Xorg stack and drivers as recommended here:
https://wiki.ubuntu.com/Kernel/LTSEnablementStack

sudo apt-get install --install-recommends xserver-xorg-core-lts-xenial
xserver-xorg-lts-xenial xserver-xorg-video-all-lts-xenial xserver-xorg-
input-all-lts-xenial libwayland-egl1-mesa-lts-xenial

Then I updated the packages uploaded to the PPA.
Then I tried them booting with different kernels.

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You received this bug notification because you are a member of Ubuntu-X,
which is subscribed to xserver-xorg-video-ati in Ubuntu.
https://bugs.launchpad.net/bugs/1610591

Title:
  Video acceleration regression for Radeon Xpress 200M (r300) in xorg-
  lts-xenial & xorg-lts-wily

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