ATI Proprietary Driver
ATI proprietary drivers do have a bug in them which makes the combination of VideoOverlaying and TV-Out useless. If you have a display attached to the vga output connector, you will find the VideoOverlay mode fully functional. However when the TV-Out connector is used, you will see the top-half of the actual TV/DVD signal. Disabling this feature in the xorg.conf file (or use OpenGLOverlay instead) gives the whole TV/DVD signal, but may work slowly depending on the overall speed of the system you are using.
On my personal (Athlon XP 1800+) mythtv system the TV/DVD playback functions are too slow, even with OpenGLOverlay mode active on the binary drivers. So for normal TV-Out functionality I went to the store and bought a NVidia card instead. My desktop system however (the 2nd mythfrontend :-) still functions perfectly with a ATI Radeon 9200SE. Attached to a monitor and with VideoOverlay active...
For users experiencing black-and-white TV output: please verify if the TVFormat option is set to the one valid for your country. All ATI cards I have seen default to the American TVStandard 'NTSC'. For a mythtv box in the Netherlands use the following option in the Device section in xorg.conf: Option "TVFormat" "PAL-B"