I'm using 2.6.33-rc5 and xf86-video-ati and Mesa from git as of 12/24/2010. If I start either doom3 or ut2004, I get no mouse input. doom3 throws errors related to XF86DGANoDirectVideoMode. While I know that DGA is deprecated, and KMS has issues DGA, ut2004, at least, previously worked fine with KMS disabled (and I'm fairly certain I tested doom3 previously as well, and that the mouse worked fine). MAD's commented on #radeon that it should work.
Unfortunately, the only way to get acceptable performance in doom3 with the arb2 render path is with accelerated blit, which requires KMS.
Sorry, mesa and xf86-video-ati are up-to-date from git as of 01/24/2010, not 12/24/2010 :-)
And I probably should have mentioned that this is on two separate machines, one with an HD4350 and one with an HD4850.
You can work around this problem by setting this env varbiable: SDL_VIDEO_X11_DGAMOUSE=0, and i think doom3 has an option for that in its .cfg file
Sorry for the noise. That seems to be the answer. Thanks :-)