Just wanted to add that vdpau works with mpv for me with the HD3850 AGP. So the "no GPU accelleration" and "no video output in vlc and mplayer" thing could be another problem.

Using an old P4 with a HD3850 AGP. The First boot (2 or 3 days ago) of this kernel stopped and I had to hard reset the computer. All other boots (4 or 5 with the boot today) were flawless (no problems). Did not test more though.