Overlay (XVideo) support on X1250?

[WonderClown]

I have a new mobo with integrated Radeon X1250 video, and it appears from my various efforts at getting video overlays (xv/XVideo) to work that it's just not supported. The open-source radeon driver does not support my chipset, so I'm left with fglrx. I've installed the latest 8.42.3 driver, and I get these warnings when I try to boot with overlay enabled:

(WW) fglrx(0): Textured Video is currently not supported on IGP hardware.
(WW) fglrx(0): Video Overlay not supported on AVIVO based graphics cards.

I have tried various combinations of the VideoOverlay, OpenGLOverlay, and TexturedVideo options, and nothing works. Without the xv capabilities, full-screen video playback is awfully choppy.

Is there anything I can do that I haven't tried yet? Any hope of the newer open-source drivers being up to snuff anytime soon?

UPDATE: The solution is to use the new opensource RadeonHD driver -- even without acceleration video is perfectly smooth. See below.