I had the same issue using the open 'ati' driver on my R300 powered 9700Pro when running Totem on gutsy.
How ever if i run VLC and select X11 video output in the advanced options of the Output Modules item, i get smooth video that doesn't appear to have any issues, and i don't think its cpu rendered as it'd be slow and jerky on my Ath XP2600+.
I had the same issue using the open 'ati' driver on my R300 powered 9700Pro when running Totem on gutsy.
How ever if i run VLC and select X11 video output in the advanced options of the Output Modules item, i get smooth video that doesn't appear to have any issues, and i don't think its cpu rendered as it'd be slow and jerky on my Ath XP2600+.