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I run it at 1280*1024*100Hz typically (19 incher). I have never had a Matrox card, but have had a plenty of ATI Radeon 'superior' 2D that proved to be nothing but buggy drivers. I have been using Matrox at work, and nothing impressive, I've to say. It's slow and the image is not as good as some people here say. >>
First of all, on a 19" 4:3 CRT, 1280x1024 isn't even a "correct" resolution. The correct resolution for that aspect ratio is 1280x960 (which Matrox drivers include by default, in addition to 1280x1024). At 1280x1024 your images will be distorted, although you probably don't notice it since you've gotten used to it (assuming you are running a 4:3 CRT).
Second, I find that the image improvement is most noticeable at the extreme. I run 1600x1200 (large fonts) on my home and work computers, and if the video quality isn't up to par my eyes bleed.

I have found that Matrox cards consistently are very good at that resolution, but the Radeons and Rage 128s are good too. nVidia cards are all over the map. At least from the few I've seen, some nVidia cards are pretty good but some just are complete suck. (However, I've never tried a Geforce 3 or higher.) Note that if your monitor isn't up to the task though, you won't notice the difference. I run two computers with Samsung SyncMaster 950p's and one computer with dual monitors - Samsung 700NF and 900NF. While these are by no means high end monitors, they are better than average, and even these monitors can show the difference between crappy 2D and good 2D. (I just wish I could run 85 Hz on the 950p, but I can't.)
Third, just as importantly, in the desktop world Matrox has superior multimonitor drivers I've found. Lots of settings, and easy to use.
So if you want to guarantee yourself having lots of configurability and consistent good 2D quality at high resolutions, Matrox cards are excellent. So far the 3D is suck though, I agree. Fortunately, I don't game on my work computers. As for the bugginess of ATI drivers, I haven't really noticed that, but that's probably because I don't game much, and I usually buy my video cards long after they've come out (and have had a chance for the drivers to mature).
EDIT:
Just saw your overclocking comment. Well, it's irrelevant in the business or 2D graphics desktop world, but my ATI Radeon LE 32 MB DDR overclocked stably with a new heatsink/fan (it came with no fan), from 143 MHz stock to over 190 MHz (CPU/memory). Stable as in heavy duty Unreal Tournament. I benched it at over 200 MHz in Quake III, but it was not stable at that speed. For 24/7 usage, it was set at 180-something if I remember correctly. Right now I'm running it at 166 MHz with no fan, but I'm no longer gaming - ie. 2D usage only.