So put this in .bashrcThe legacy backend is used automatically for all drivers not supporting at least OpenGL 2.0 and the fglrx driver.
save it, then log out and log in.
That will force FGLRX to get the new/modern backend which it can only barely handle. With vsync or tear-free desktop on it's too slow to use, it becomes usable by turning those off, then you just have tearing and the fact that any video game you load will be garbled.
It seems that FGLRX depends on the legacy fixed function OpenGL 1.x backend, which is also how Compiz works, or else it just totally falls apart. If not immediately, then as soon as you try to load a compositing window manager supporting OpenGL 2 and another OpenGL application.
Seeing as the problem is hardly unique to GNOME Shell and KDE is just feeding FGLRX an obsolete backend to make it happy, I'm going to suggest that AMD's driver is simply broken. Also, as mentioned before, Firefox in OpenGL mode with FGLRX renders upside down and backwards. I got a screenshot of that btw.
Then if you tell Chrome to ignore their OpenGL blacklist and force OpenGL compositing and canvas on, it will randomly panic the kernel.
I think as time goes on you'll see more and more projects simply ignoring FGLRX because it's too broken to even deal with. Firefox and Chrome even specifically say that it is the fault of FGLRX and there's nothing reasonable that they can do about it.