Hm. I did a little more testing and found out that if I replace atioglxx.dll with the version from the 7.11 drivers, the problem goes away. Version 6.14.10.7058 of atioglxx.dll works, but version 6.14.10.7169 does not.
I have attached the working file to this message (MD5 0a532c28eb674d8a09b88cae57d2b31a), perhaps someone could replace their version of the file (located in C:\Windows\System32, make a backup of the original of course) with this one and see if it helps.
e.g., rename the original atioglxx.dll to atioglxx.old, unzip the DLL from attached ZIP into System32. No restart is required, just load Penumbra and start a new game (with Post Effects turned on). See if anything improves.
Again, I'm not using an HD card, I have two X1650XT cards.
Finally, to avoid up any confusion about nomenclature with the ATI drivers, I say "Catalyst" to refer to the red application used to customize driver settings, and "Driver" to refer to the 32 files in Windows\System32 folder totaling about 36MB. They are actually two separate things, and installing a version of the Catalyst center will not change the actual drivers (unless you have a combined package).
The most important file for Penumbra is atioglxx.dll, the OpenGL part of the drivers. Digressing a little... if you are using Crossfire, you may be interested to know that if you modify one of the strings in this file (like "swkotor2.exe") with a hex editor to be "penumbra.exe", it will use the faster alternate frame rendering (AFR) Crossfire method, instead of scissor mode. This would solve the problem of a miscolored line being visible in the middle of the screen (which doesn't happen all the time, and when it does, it seems to only be on bright things like the lightning in the intro and the bloomed portholes in Overture). Also, upgrading the BIOSes of each video card so that they are identical solves other Crossfire issues with Penumbra (line issue in scissor mode, incorrect black levels, swapped or distorted frame order in AFR mode).
Anyway, that is off topic. If anyone can try the OpenGL driver I have attached, I would be interested to know if that fixes the problem, and what hardware you have.
edit: Attachment won't upload. Finding a place to host it... Ok, this might work.
http://www.2shared.com/file/2833197/4b55...oglxx.html