ATI Rom Extender 1.2.5 - Buggy?

I found this extension on a package called Old-Radeon-Software.sit but it seems to have issues with switching resolutions. Switching from 1280x1024 to 640x480 or vice-versa makes everything on the screen go away except for the gray background and the mouse arrow. Even on reboot it persists, forcing me to boot without extensions, disable it and reboot again. Is it a buggy extension or is anything else that needs to be updated as well? I already have the latest ATI update installed. Mac OS version is 9.2.2. Last stable version of that library for me is 1.2.
 
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