I'm trying to install 2.6.29 on a new PC with ASUS M3A76-CM
motherboard which claims to have an integrated ATI Radeon 3000

I've compiled support for Radeonfb and the other I2C things.
However, when the kernel boots the card is not detected.
It either boots in VESA or (when the vesafb and vga framebuffers
are not compiled in) in text mode.

I've even added the option "video=radeonfb:1024x768".

Grepping dmesg for 'radeon' shows nothing except the command
line option.

I suspect the Radeon 3000 is r600. That is too new. Radeonfb is dying, work hasnt been done on it since r300 or 400. To get it working youll need either a generic driver like vesafb or uvesafb or ideally the new modesetting radeon driver. It is a dual purpose fb and drm driver which you load with modprobe radeon modeset=1. The only problem is, its slowly being worked into the kernel. Lookup the custom kernel, drm rawhide.