The radeonhd driver, or xf86-video-radeonhd, is an X.org video driver for codenamed R500-R700 graphics devices. It was developed by the X11 community, mostly centered around Novell and AMD, with the free documentation provided by AMD.
The driver supports full modesetting (read: any mode is usable, not only those provided by the BIOS), and is compatible to RandR 1.3. 2D and Xv (video) acceleration is provided for all supported GPUs; 3D acceleration via Mesa is supported for r5xx/rs690 GPUs (X1xxx) and is in progress for r6xx/r7xx GPUs (HD2xxx-HD4xxx).
Status 09/2010: Linux distributions, including Novell's openSUSE, have now abandoned radeonhd as the default driver, instead using the radeon driver. radeon has more features, including Kernel Mode-Setting support and more 3D support, and it supports all Radeon generation from original R100 Radeons to R800 Radeons (HD 5000 series). Radeonhd can be continued to be updated as long as there are people find it useful.
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how to setup 3D for r6xx/r7xx (experimental)