So if I understand correctly, you tried running the game with 11.10 driver and Catalyst enabled and the artifacts disappeared but the frame rate was too low?
I have a similar problem. However, it isn't exactly that the framerate is too low; it's that the whole game stalls as textures are fetched. So anytime you look somewhere new and textures start to get loaded, the whole game freezes for around 10 seconds. This problem is alleviated when Catalyst A.I. is disabled, but then texturing artifacts appear. Since Catalyst A.I. is meant to improve texture filtering, it is likely trying to prefilter the textures as they are loaded into VRAM, causing the freezing.
AMD Athlon II X2 250 Processor, 4GB RAM
ATI Radeon HD 5770 1GB
Windows 7 32-bit
Desktop Resolution and game resolution: 1680x1050
No Rageconfig.cfg, console enabled, no graphics cfg tweaks
Catalyst Control Center at default settings after clean install of 11.10 (removed all files by deleting the device driver, removed Profiles.xml)