I think I have it fixed, at least somewhat.
I used Universal Extractor and extracted the 7.11s to a folder I made, and tried to update manually via Device Manager. Oddly enough, the 7.11's .inf doesn't list any cards newer than the X1650 series.
I then extracted the 7.7s to another folder and in the list off possible devices I saw the following three choices:
ATI Radeon HD 2400 Pro
ATI Radeon HD 2400 Pro AGP
ATI Radeon HD 2600
I chose the 2600's entry, slightly worried about not having an explicit 'AGP' choice, but it seemed to accept it okay. It prompted me to look for a couple of files, the first (filename I can't remember now) was already in the 7.7's extracted output. I remember the second being ativvaxx.dat, and in that case I directed it to the 7.11's extracted files.
After rebooting, I anixously awaited with baited breath, but got no blue screen, no error messages, no nuthin'. I ran dxdiag and all the 3D tests ran without complaint. I opened Media Center and got no warning or anything, just straight in and off to the races. So I think things are in a working state, good enough until next month when 7.12 *should* fix everything for us AGP users.
As for WinDVD, it still won't give me the option of using hardware decode acceleration, and I'm beginning to suspect maybe it never has - that it's too old (version 4) or that it's OEM (came with my motherboard) and that I need to pay for an upgrade. Whatever. Things play, things work, I'm happy for now.