i take it it says "Direct Rendering: No" near the top of the output. you need to make that say Yes. and you will be good to go.
have a read up on getting ATI to work in linux with direct rendering, there are discussions on this board and also on the gentoo forums. you need to set some kernel options and download some drivers from a german site. it's a little painful, but it will work if you give it the attention it needs. Make a new thread with any problems you encounter
Good luck.