That would be incorrect. I have a newer MS Intellipoint Explorer USB mouse and it works fine from the start of the installation process in RedHat 8, 9, and FDC1.
I just spent 12 hours trying to resolve this same issue after installing Slackware 9.1. I was using the same kernel version (2.4.22) in both installations (redhat and slack), the XF86Config was exactly the same, but the mouse only moved up and down on the screen.
If I do cat /dev/input/mice
I can see that every motion of the mouse is being registered, including the side buttons. But the controls do not map to the pointer functionallity correctly.
I knew Slackware was a very 'manual' installation, but I didn't know I'd have to map out my mouse (which I still don't know how to do).
I love the amount of control that slack gives you, but I have better things to do with my time than spend hours trying to make something that should be 'automatic'. I have since reinstalled Redhat, and it only took me 15 minutes to get my mouse working (the time of the installation).