I think ATI cards have worse dos compatibility than nvidia cards, so that doesn't sound good.
Back then I had some graphical glitches on some DOS games (such as ingame graphics messed up on some non-protected mode games using 320x200x8 resolution) with Radeon HD series (3850/4650) AGP cards, although they're relatively newer than the last nVidia AGP cards (such as GeForce 7950) which worked fine under DOS. Interestingly, 320x200x8 was absent in 3850/4650's video BIOS when I tested using VESATEST. I don't have earlier HD series video cards so I'm not sure about these, but the issue might have existed for a while.
Still, I think a PIII may not be able to draw out the full potential of the higher-end video cards even with AGP 4x (universal).