Distribution is Gentoo and running a not-so nice portage arch flag, ~x86.

Video card is an ATI R300 ND (Ati 9700 Pro AIW) with the latest ATI Proprietary drivers (tainting Linux) version 8.34.8, I think. Linux version is 2.6.20 with Gentoo patchset. Hardware otherwise is an ordinary Abit AN7 w/ XP3200+... Now the funky thing is, that the GUI dies when I try to change resolution or change to fullscreen mode, but audio stays playing like nothing happened. The process dies like it should with an ordinary kill PID, so it doesn't hand bad enough to make me send a kill -s 9 to it....

Contents of openglerr.log are:

visual x bf lv rg d st colorbuffer ax dp st accumbuffer ms cav
id dep cl sp sz l ci b ro r g b a bf th cl r g b a ns b eat
----------------------------------------------------------------------
0x29 24 tc 0 32 0 r y . 8 8 8 8 0 24 0 0 0 0 0 0 0 None
visual x bf lv rg d st colorbuffer ax dp st accumbuffer ms cav
id dep cl sp sz l ci b ro r g b a bf th cl r g b a ns b eat
----------------------------------------------------------------------
0x29 24 tc 0 32 0 r y . 8 8 8 8 0 24 0 0 0 0 0 0 0 None

And I know this configuration can do games :P, I've played DoomCube amongst other "recent" games, so it's not a DRI issue (I think).

Any suggestions on how to fix this?

Try editing ~/.vendetta/config.ini and change the options there. After that, just try to start VO and see if it works ;)