I have an IBM ThinkPad T41, P-M 1.6, 2x256 PC2700, ATI M-RADEON 9000 32MB (DX8.1), 1400X1050 LCD, WIN XP Pro SP2. My Dad has a T40, P-M 1.5, 2X256 PC2100, ATI M-RADEON 7500 32MB (DX7.0), 1024X768 LCD, WIN 2K Pro SP4. Both use the same latest ATI drivers and DX9.0c software drivers. I have completed HL2 on both computers. I can say without hesitation that, IF POSSIBLE, upgrade to the Mobility Radeon 9000. On both computers I played with everything turned on to the highest settings, except for shadows and reflections, which HL2 does not allow you to turn up on DX7.0 hardware. My recommendation is based on the difference in visual quality, as explained in
this AnandTech article. The reduced draw distances are especially bad, as in a lot of open air scenes the 3D world will be cut off by white walls, and some times you can not see the combine until they are very close. If you want to upgrade to increase the speed of the game, then the only solution would be to run the game at a lower resolution, as the bottlenecks are the FSB, AGP and PC2100, i.e. the I/O bandwidth between the individual components, and the not the actual components themselves. Individually each can easily process the 2.3 Mega Pixels your display requires, but pushing that across these laptop interfaces at 60 fps is just not possible.