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AMD 8.39.4 Driver Released -- 8.35 no longer does it better
Your fix worked only partly since now the logo only shows "Unsupported Hardware", as it really is the case since I looked at Xorg.0.log and my X1950XT is not recognized - a thing that didn't happen with the previous release...
Another ridiculous driver release by ATI/AMD... At least I wasn't expecting anything this time (to be honest I wasn't expecting such a lame bug as this watermark issue here).
My Ubuntu release is still running on 8.28 drivers... I don't have any reason to upgrade to any of the newer releases, and take risks on going from something that works to a newer driver that may be even worse than what I got now.
Considering that now ATI is releasing grossly bugged drivers, I guess we shouldn't expect important things like AIGLX support soon right?