Your instructions basically work because you're deleting the ATI display drivers, so OS X defaults to no hardware acceleration. In the very long "display anomalies" thread to which you linked, this seems to be related as a pretty common solution.
This is not a solution IMO. It's basically telling your computer not to use the built-in video card for much more than a frame buffer. Why is this a bad thing? Well, while it eliminates the anomalies and inevitable freezing, it also makes your computer unusable for anything requiring hardware acceleration (which is a lot of things these days, including 3d games and HD video playback, though the latter can still work albeit more slowly).
You claim that the problem is due to bugs in the ATI driver, but there are two issues with that theory: 1. the problem also happens under Windows via Boot Camp, using several different versions of ATI's Catalyst drivers that support the R500 family (which the X1600 is a member of); and 2. these sorts of anomalies tend to be usually indicative of hardware failure. For example, the nvidia 8800 series famously had similar issues (more and more graphical anomalies followed by eventual lock-ups), which were ultimately caused by hardware failure relating from many heat cycles.
In this case, the thing that seems closest to the truth to me came in a forum post over at the WoW forums (see the last post, by member "Flloyd"):
Flloyd's post
(Linking to the Google cache because the original seems to have been deleted.)
Quoting the relevant part here:
"There has been a lot of discussion an Apple forums and other forums about these issues with the Core Duo (not Core 2 Duo) version 1.1 MBPs with the x1600 GPU. The general consensus is that it is definitely a hardware problem and someone mentioned that Apple knows internally that it is an issue with the solder connection between BGA packages and the main board. These machines came out right around when manufacturers were just starting to become ROHS compliant, (the standard that forbids the use of solder containing lead in electronics,) and so it is not surprising to me, (having dealt with some similar issues from the point of view of the manufacturer at work,) that these problems are happening. The lead-free solder is much more brittle than the old kind and solder joints that crack after many thermal cycles are a common problem that everyone trying to use the lead-free solder has had to confront. That being said, Apple still needs to fix this, because anyone who bought one of these would have had no expectation of this kind of failure and many would have bought something else if they knew this was a possibility."
Thus, the little BGA solder balls become worse over time, and when heated enough (i.e. when the GPU load becomes great enough for long enough, which is when people usually report the problems to occur at first), may start to get a bad connection to the logic board, as a result of thermal expansion or lower conductivity or a combination of things.
Now, I'm not 100% sure that this is
the answer, but it seems most plausible to me. The other common explanation for this is that the thermal paste is applied unevenly on the GPU, or that the thermal paste gets old. However, while people report getting fewer anomalies after re-applying thermal paste, the problems usually stick around and once again start to get worse over time. My theory here is that while re-applying thermal paste helps with lowering GPU temps and lowering the frequency of the symptoms, it doesn't solve the underlying issue. You can get the same effect (lower GPU temps) by downloading and using the Fan Control preference pane or downloading and using the smcFanControl application to increase fan speed. Like re-applying thermal paste, this would decrease GPU temps (and thus incidence of graphical anomalies and eventual lock-ups), but not eliminate the problem.
It's sad that Apple doesn't (and likely won't) acknowledge this problem as a hardware defect. As far as I know, the issue manifests itself only after several years of use, which is when warranty (even AppleCare) has run out. Those who are lucky enough to have had the Macbook under warranty when symptoms first appeared just had their logic boards replaced for free, and later reported the same problems appearing after a few years with the new logic boards (which predictably contained the same hardware flaw). As I've said before, I'm not 100% confident in this particular explanation, but I am 100% confident that it's a hardware issue.
So nowadays, people generally have the choice of either buying a new laptop or forking over $300-600 for a new or used logic board to extend the life of the Macbook for a few more years, which would inevitably fail again. There is hope though: the aforementioned nvidia cards (the GeForce 8800 series) with the hardware flaw were eventually recalled and replaced for free, but a lot of people have reported resurrecting their dead cards using this unorthodox method:
http://hardforum.com/showthread.php?t=1421792
http://hardforum.com/showthread.php?t=1553073
http://hardforum.com/showthread.php?t=1470144
The same method also worked for people with different failing cards (even built-in laptop ⚠ GPUs, such as we are talking about here), and not just the GeForce 8800 series. I might try this out in a week or so and see if it works for me and report back. I just don't know if it's worth it -- this is my primary work laptop and I can't afford to have to mess around with getting a new one in the middle of the school year if it dies in the process. Not to mention the fact that while the problem certainly is annoying, since I have to save my work every few minutes in anticipation of the computer locking up, it's certainly not critical.
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