The radeon driver no longer supports UMS.  Because of the current
PowerPC kernel config (radeonfb is built in) KMS drm cannot be
activated. You are falling back to the fbdev driver in 8 bit mode (hence
the poor colors).

One way to activate KMS is using the video=ofonly parameter (this
disables radeonfb).  If this causes freezing then you should combine it
with radeon.agpmode=-1 (forces PCI mode).

I've said the same thing on this ubuntu forums thread
http://ubuntuforums.org/showthread.php?t=2053596

These solutions have also been documented in the PowerPC FAQ for a long
time now
https://wiki.ubuntu.com/PowerPCFAQ#What_yaboot_parameters_should_I_use_for_graphics_problems.3F
and https://wiki.ubuntu.com/PowerPCFAQ#Radeon_cards

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You received this bug notification because you are a member of Desktop
Packages, which is subscribed to xserver-xorg-video-ati in Ubuntu.
https://bugs.launchpad.net/bugs/1046951

Title:
  No desktop environment or window manager, just X with the mouse

Status in “xserver-xorg-video-ati” package in Ubuntu:
  Confirmed

Bug description:
  The only thing that the graphical display shows is the mouse pointer.
  It moves around just fine, thoug the immediate square area surrounding
  the mouse has bad graphics.  Except for the mouse area, the screen is
  black.

  ProblemType: Bug
  DistroRelease: Ubuntu 12.10
  Package: xorg 1:7.7+1ubuntu3
  ProcVersionSignature: Ubuntu 3.5.0-13.14-powerpc-smp 3.5.3
  Uname: Linux 3.5.0-13-powerpc-smp ppc
  ApportVersion: 2.5.1-0ubuntu4
  Architecture: powerpc
  Date: Thu Sep  6 20:20:31 2012
  InstallationMedia: Lubuntu 12.10 "Quantal Quetzal" - Alpha powerpc (20120904)
  SourcePackage: xorg
  UpgradeStatus: No upgrade log present (probably fresh install)

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