[EDITED]
Hi guys & gals,
After a few hours of extreme psychological pain, I finally got this blasted thing to work on the latest kernel under FC3 (some previous knowledge regarding patching, etc would have been useful)! So I thought I'd help as many ppl as possible avoid such trauma by posting a short how-to here... Enjoy!
1) Download the latest ATI Driver for X.org from here:
http://www2.ati.com/drivers/linux/fg....25-1.i386.rpm
2) Download the ATI Development Team's kernel 2.6.10 kernel patch from here:
http://rage3d.com/board/showthread.php?t=33798874 (just cut & paste mtippett's code from the first message into a text file and save it as 8.8.25-kernel-2.6.10+.patch at the same place you saved the Driver)
3) Open a terminal and su as root, go to the download directory and install the drivers by executing the following command (it's necessary to overwrite the old MESA GL drivers with the ATI ones, they are backwards compatible with MESA anyway): rpm -Uvh --force fglrx_6_8_0-8.8.25-1.i386.rpm
4) Go to /lib/modules/fglrx/build_mod/ and apply the patch by using a command similar to (where ~/Download is the directory where you put the patch file): patch -p0 -i ~/Download/8.8.25-kernel-2.6.10+.patch
5) Rebuild the driver by executing: sh make.sh
6) Go back one directory to /lib/modules/fglrx/ and reinstall the driver by executing: sh make_install.sh
7) w00t! There should be no errors (there might be one error while trying to load the fglx driver module, but this should be resolved on the next reboot - it's because your current driver is already loaded) and everything should have installed properly.
8) Time to backup your current configuration, make a backup of your xorg.conf file by executing: cp /etc/X11/xorg.conf /etc/X11/xorg.confBAK
9) Switch your boot mode to Shell only (no graphics) in case your configuration fails: edit the /etc/inittab and change the boot init mode from 5 to 3 and save
10) Now that everything is installed OK and backed up, configure your driver for your video card and monitor(s) by executing: /usr/X11R6/bin/fglrxconfig
11) In the end, tell the program to save the settings to /etc/X11/xorg.conf. YOU WILL NEED TO EDIT THE FILE TO CHANGE THE KEYBOARD DRIVER TO KBD, other modifcations may be necessary, use your backup for this!
12) It's SHOWTIME! Reboot your computer, at the Shell, login as root, start the GDM by executing: gdm
13) Login as any user, open a Terminal and start ATI's openGL test program by executing: /usr/X11R6/bin/fgl_glxgears
14) If all is well, you should see a new window with a rotating gears textured cube in it. Congrats!!!

You can edit your inittab file back to boot init mode 5 now that everything works for sure. You can run the older glxgears if you want to see higher scores and no cube... Oh, and by running the /usr/X11R6/bin/fglrxinfo command, you should see anything ATI in there (MESA means it didn't work), ex:
display: :0.0 screen: 0
OpenGL vendor string: ATI Technologies Inc.
OpenGL renderer string: RADEON 9500 Pro Generic
OpenGL version string: 1.3.4769 (X4.3.0-8.8.25)
If you had any problems with 12 through 14, then do 10 again or try editing the xorg.conf file to see what's up. You can compare it to your xorg.confBAK backup to see if anything's missing. But it should all work fine.
Enjoy!!! It's gaming time!