My understanding of the SGX drivers is that it's a mess. ImgTec did a basic implementation and others like Intel hired Tungston to improve the ImgTec drivers. Why?
Because the ImgTec drivers don't integrate with X very well. The only thing they do is query the server for the location of windows so it can calculate clip rects - and that's done over a socket via Xlib. So, for _every_ swap buffer, the driver has to do several round trips to the server to find out if there are any windows obscuring the 3D window. That's a whole lot of over head (unless the window is full-screen, where it just blits the back buffer directly to the front buffer and ignores clip rects). So that's _all_ the integration you get. Forget texture-from-pixmap, forget compiz. None of the fancy stuff modern x.org can do is possible.
The Gallium3D SGX drivers should allow much better x.org integration and provide the DRI2 interface. The problem is that there's a whole lot of stuff that needs to mature to take advantage. X.org has a massive dependency tree - even after modulerization. DRI2 interfaces are still not finalized, the TTM isn't mainlined yet (not that the SGX drivers would use it anyway). The list goes on (Ever tried to cross-compile X.org?).
In the long term, Gallium3D drivers for the SGX on the Pandora is going to be the way to go, but I suspect you're looking at 1-2 years. There's also the issue that the work Tungston does for Intel belongs to Intel and probably wont be open source. The pandora uses _the_ competing processor to the Atom - I doubt they want to give stuff away for free having spent a fortune with Tungston. However, I'm sure Tungston would do the _exact_ same work for Pandora (or perhaps TI) if given enough cash?
In the mean time, Pandora can use an older release of KDrive (before it was folded into X.org) and the ImgTec supplied drivers. Ok, so you don't get compiz - but you can still run full-screen games, which is what the Pandora is all about! You also don't get the X.org bloat. Or you can use Qt/Embedded - but I'm biast (see
this if you're curious why - hint: 10:15 slot).