I'm running current git master xorg-driver-ati on my 

platform        : PowerMac
machine         : PowerBook5,8
motherboard     : PowerBook5,8 MacRISC3 Power Macintosh 
detected as     : 287 (PowerBook G4 15")

0000:00:10.0 VGA compatible controller: ATI Technologies Inc RV350 [Mobility Radeon 9600 M10] (prog-if 00 [VGA])

even with default settings for the "Device" section I get a kind of strangely swapped (see attachment) hw cursor for some cursors (including the default 'X'-cursor) but not all (most of gnome's cursors are ok, I guess it has to do with cursor bit depth or format); if I enable sw cursor everything works as expected;