DriConf should solve the problem. You can download it from here: http://dri.freedesktop.org/wiki/DriConf Or if you are using Ubuntu, you can also install it from the Universe repository. After installing, you must enter DriConf (you'll find it in "System/Preferences/3D Acceleration") and enable "S3TC Textures". After doing that, the game should work. It worked for me on an Intel GMA X4500. It works too with KotOR II.
