I tried 
xserver-xorg-video-ati_6.7.197+git20080103.c6522088-0ubuntu0tormod_i386.deb  
which I believe is the latest. I believe it looked somewhat better (albeit hard 
to judge b/c I am at work with very 
different lighting), but definitely I think the text mode looked better 
although there was still a little flicker there.

However, when going back to X from text mode the vertical flicker was still 
noticeable, which I also checked with the
plain X command after killing gdm.

Let me know if and which details more you need with this new package.

Misha

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screen flickers only if text tty entered (radeon)
https://bugs.launchpad.net/bugs/175243
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