Yes, KMS and GEM/TTM in the radeon/drm/mesa drivers currently supports from R1xx through R5xx, plus RS690 I believe. Not sure about RS600.
The Catalyst drivers do not work with the KMS drm; the issue is not so much KMS as the memory manager API; the proprietary drivers use a different (proprietary ) kernel memory manager.
AFAIK the primary reason X needed root privileges was that the X drivers accessed hardware directly. Once that stops (KMS moves the hardware accesses into the kernel) then in principle you don't need root privileges for X any more. There are probably a few other things that need to be tweaked but airlied first ran non-root X over a year ago with early KMS.