Posting on bug reports and/or creating your own is a good step. You can help confirm already existing bugs. It seems like that bug report has already been confirmed, triaged, and assigned a high priority which means a fix will probably be released in the next few months upstream, so you will have to download the updated driver manually or from another repository (debian or ubuntu intrepid ibex repos when they go online). You can check back on that report or subscribe to changes in it so you will know when a fix has been released. I wouldn't bank on the driver being released under the Hardy repos, except maybe through hardy-backports.

The proprietary driver will never be written and packaged to work for cards this old. They drew the line at Radeon 9500 or so, which means support will never be implemented for older cards.