I have very similar problem with ATI Technologies Inc Radeon Mobility HD 3670.
By using latest upstream kernel (2.6.34-999-generic #201004211003) it is possible to use dual head, but the cable for the external monitor may be connected only after I log in.
If the cable is connected before login prompt then both screens become black when login should appear (note that I use Kubuntu, didn't try on Ubuntu yet).
I have very similar problem with ATI Technologies Inc Radeon Mobility HD 3670.
By using latest upstream kernel (2.6.34-999-generic #201004211003) it is possible to use dual head, but the cable for the external monitor may be connected only after I log in.
If the cable is connected before login prompt then both screens become black when login should appear (note that I use Kubuntu, didn't try on Ubuntu yet).