Bug#671103: Are you still experiencing this problem?
I experienced the same in Ubuntu 12.04 3.2.0-23 with Rage 128 Ultra
AGP 2x on iMac G3. The procedure mentioned by Michel Danzer solved.
add aty128fb to /etc/modules and /etc/initramfs-tools/modules then
boot with video=offb:off.
In 3.2.0.-25 and later, those steps are no longer necessary.
On a side note, I have found it necessary to either disable DRI or
ForcePCIMode to resolve extreme slowness and the following in
Xorg.0.log
[ 298.704] (EE) R128(0): R128CCEWaitForIdle: (DEBUG) CCE idle took i = 1025
[ 298.705] (EE) R128(0): Idle timed out, resetting engine...
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