As mentioned, the tearing is expected with this driver. The only solution is to disable desktop effects.
The underscanning is also a driver issue. When the driver detects that you are connected to a TV, it automatically underscans (despite the fact that nobody uses CRTs anymore...).
You can fix it by manually setting the display window and position like so:
Code:
aticonfig --set-dispattrib=tmds2i,positionX:0
aticonfig --set-dispattrib=tmds2i,positionY:0
aticonfig --set-dispattrib=tmds2i,sizeX:1920
aticonfig --set-dispattrib=tmds2i,sizeY:1080
Obviously change the above to match your display port and resolution. I always do this after gdm/kdm have started.