Why is xrandr the only approach? In this guide https://help.ubuntu.com/community/RadeonDriver there are two alternative approaches explained, MergedFB and Xinerama. It must be possible to circumvent the hardware limit somehow, since the dual screen works perfectly on Win XP.
MergedFB has been replaced by xrandr. The radeon driver does not support 3D acceleration at the same time as xinerama. Again, xrandr is the only approach.
The windows drivers may tile textures in a way that is not possible with the radeon driver, or the XP compositor may do the tiling.