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With XFree86 4.0 running on fbdev (Option "UseFBDev" in the "Device" section), the hardware cursor shows up as a solid white square minus a horizontal cursor-shaped hole in the upper left. Turning off the Xserver's hardware cursor solves this problem, but the back buffering for the software cursor corrupts DRI drawing. Other than those two issues, XFree seems to work remarkably well on matroxfb, with the added bonus that the console isn't trashed when the DRI freezes XFree86.
Have you tried using the mga driver, or the 3.3.6 server instead?
Both XFree 3.3.6 and the 4.0 mga driver work fine, most of the time. However, DRI is rather unstable, and when XFree crashes, the console is left in an unusable state until next boot unless I run it on matroxfb.
The latest rawhide RPM's should fix this for you. Make sure you upgrade Mesa at the same time, as well as any other dependant packages. If you still have problems, please reopen the bug, and I'll dig deeper. My mga g200 is working ok with the rawhide stuff.
The hardware cursor now works in both X and on the console, but if the console is run in 8 or 16bpp, typing characters doesn't produce the expected result after switching away from X (I get patterned snow that looks like the framebuffer pitch changed without the console knowing it ...) fbset -depth 0 fixes it, but that's no fix. :)
Oops, I lied. The hardware cursor is still broken under fbdev, unless you turn on "NoHWCursor" in XF86Config-4.
Xconfigurator supports --usefbdev as of 4.9.33.