I have also been pursuing this problem while running 10.10 on an eMachine D620 (x1250, RS690M chipset). I am using the radeon drivers from xorg-edgers-radeon ppa (http://ppa.launchpad.net/xorg-edgers/radeon/ubuntu).
Starting with Thomas's work, I was able to find a mostly working solution. The key enabler seems to be vsync_mode.
The first test that worked was running glxgears using the command line vsync_mode=0 glxgears. The result was going from ~10 FPS to ~150 FPS. (This is still not great, but a huge change.) To make this change permanent, I then ran driconf and set the option "Synchronize with vertical refresh" to "Never synchronize...". Logging out and back in made this take effect and solve 90% of my problems.
I have also applied changes from Thomas Wake into my /etc/X11/xorg.conf file. Here is what it looks like now
Section "Device"
Identifier "Configured Video Device"
Driver "radeon"
Option "DRI" "on" #on is the default in recent radeonhd versions
Option "AccelMethod" "EXA" #this is the default in recent radeonhd versions
#!used Option "EAXVSync" "off"
Option "ColorTiling" "on"
#!used Option "AGPMode" "8"
#!used Option "AGPFastWrites" "on"
Option "EXAPixmaps" "on"
Option "AccelDFS" "on"
Option "RenderAccel" "on"
#!used Option "DRI2" "on"
# from another source
Option "NoAccel" "off"
#!used Option "EnablePageFlips" "on"
EndSection
Section "Monitor"
Identifier "Configured Monitor"
EndSection
Section "Screen"
Identifier "Default Screen"
Monitor "Configured Monitor"
Device "CYonfigured Video Device"
EndSection
The lines starting #!used are options that are not used, but recommended by others from previous versions.