gfxmode/gfxpayload in grub2 doesn't really work properly with the kernel yet. vga= works but only if you use linux16/initrd16 rather than the linux/initrd commands.
However, when you installed grub1 instead, did you have to use vga= as suggested in a previous comment? If so, then to be honest this still feels like a kernel bug for not working out of the box.
gfxmode/gfxpayload in grub2 doesn't really work properly with the kernel yet. vga= works but only if you use linux16/initrd16 rather than the linux/initrd commands.
However, when you installed grub1 instead, did you have to use vga= as suggested in a previous comment? If so, then to be honest this still feels like a kernel bug for not working out of the box.