The ATI new beta drivers didn't seem to be working for me when I installed them over the top of the previous Rage optimised release. However, a complete strip-down install did. This applies to Windows 7, and probably Vista if you are so cursed.

This is what I did to fix my Radeon 5870 so I can at least play:

1) Go to control panel and uninstall ATI Catalyst. There's no direct uninstall option (on Windows 7 at least), choose "modify" and select uninstall from the dialog that pops up.
2) Right click My Computer and click properties, click "Device Manager." Find your (ATI) display adaptor in the list and double click on it. Select the "Driver" tab and click "uninstall driver", and have Windows remove all the driver files from your computer. You will now be left in VGA mode.
3) Reboot your computer so it re-detects the display adaptor.
4) Install the new beta driver. This is made somewhat interesting since you're now running at 640x480, and the ATI installer dialog is in fact a fixed size windows taller than the screen. Thanks ATI! It's not like anyone would ever want to install display drivers from scratch. Just hit tab until you think you have the install button selected and then hit enter. If you're having a lot of difficulties, the built in screen reader may be able to help you.
5) Reboot a second time.
6) Start Rage. Pray.

I'm no longer getting the crashes that stopped me from entering the wasted garage. I still have some texture pop in issues, and the 8Kb cache options now cause major texture corruption. However +vt_maxPPF 16 for the most part makes it manageable.

driver installation is piece of cake. don't be complicated. this is what I do all the time.

1. control panel > uninstall programs > uninstall AMD catalyst install manager.
2. then it will be automatically rebooting windows 7
3. use driver sweeper, clean the rest of leftover AMD driver in your HDD. it takes care of them automatically.
4. reboot again.
5. install your new AMD driver, then windows 7 will be reboot again.
6. done.

That's exactly what I do except I boot into safe mode and use driver cleaner pro then install the new drivers.