Is the latest radeon legacy driver compatible with xserver 1.13? I have HD4xxx and HD5xxx video cards on my laptop. I want to install Ubuntu 12.10 but not sure if everything will be ok with legacy driver.
It is not.
This does exist though: https://launchpad.net/~makson96/+archive/fglrx
You may want to uninstall your current drivers, upgrade to 12.10, then try that.