On my setup, the iwconfig wlan0 54M (or 11M) only works temporarily. I'm not talking about rebooting (I integrated the necessary invocation with my /etc/network/interfaces), but purely as a function of time spent connected. After a while, speed drops back down to a miserable 70kbytes/s. No amount of iwconfig wlan0 54M (or 11M) can then fix it.
I've now built and installed the legacy rt2500 drivers from the last daily CVS tarball: http://sourceforge.net/projects/rt24...ar.gz/download following the instructions in the initial post.
Things seem to be stable, I'll report back if I find otherwise.