OK, I've actually got a bit of info on this.
ATI catalyst 4.x drivers CAN work with Rally Masters, whether or not patched to the final 3.2 release.
There's a catch, however.
The PAL8 textures in the game engine are NOT compatible with the ATI drivers. Disabling PAL8 textures will allow you to run the game. Minus brake lights, headlights, smoke, fog and... oh, yes--multiplayer.
It's interesting to note that, regardless of the settings you have applied to the RM video config, when you select multiplayer, and the lobby executable runs, it does NOT remember to disable PAL8 textures. So it will crash to a desktop with no errors. I can't find a way around this; it appears to bypass your actual settings other than video resolution, which it usually keeps.
So, verify that you have the PAL8 textures disabled in the config prior to launching the game. You will notice blue backgrounds without the RM logo etc. if they are still on.
Personally, I would recommend up[censored] your install to v3.2US if possible, as there were some odd game engine and physics quirks that were ironed out.
As for future updates of the game... most likely out of luck there. No one seems to remember it ever existed. A shame, as I had some of the most hilarious multicar wrecks with friends.
<sigh>
If you simply MUST play this game multiplayer you will find an nVidia-based adapter will handle the PAL8 textures fine.
Hope this helps.
slorch