Hi,
I had a similar problem with a Radeon 7000 graphics board in my Pegasos II. The solution was to replace the "fbdev" framebuffer driver by the native "ati" driver. You can do so by editing the "XF86Config" file in /etc/X11 as root. In that file you will find a section "device" which holds an entry "driver". Replace the "fbdev" by "ati" and make sure to specify the Linux kernel option for the Radeon driver upon booting linux (addition parameter "video=radeon:1024x768@80" or whatever resolution you like in the boot sequence in SmartBIOS). There is an Alt-something key sequence which I unfortunately don't remember but which can be found on the Yellow Dog FAQ pages and which will give you a text mode login to allow you to edit the file even with a corrupt graphics display.
This all feels a bit like fiddling around with Windows 3.11 ini files but such is Linux life
. At least it worked for me and my Pegasos II is now running quite well with Yellow Dog -- except the annoying bugs in the KDE 3.3 task bar.
Best regards
CK
webmaster@amiga600.de