I have the ATI Radeon X1300 from Dell in a desktop (it is not the ATI mobility). The only way I can get it to work is with the vesa driver.
Given that I trust your observation to some degree, I took a closer look. The Etch driver evidently does not
support the Mobility X1300 (you have to move to Lenny for that), but all the Debian drivers claim to support the Radeon X1300.
From personal experience, I know that the fglrx-driver in Lenny (8.38.6-2) reqires the 2.6.22 kernel to compile correctly. As yet that kernel is not available in Lenny which complicates things a bit.
Sid includes the 8.40.4-2 driver for AMD64 and the 8.38.6-2 driver for i386. To the best of my knowledge those drivers are flawless with the current Sid kernel.
Some General Advice regarding ATI fglrx Drivers