A bug report was filled in the Second Life issue tracking system back in 21/Dec/07 and has yet to be fixed.
The problem is distorted text in some systems using ATI graphics card with Catalyst versions 7.12 and above.
Please, if you are a Second Life user, vote for this issue so it gets some attention. I want to upgrade my video drivers and still have clear text.
The url for this issue is http://jira.secondlife.com/browse/VWR-3947 .