If your motherboard supports 8x, it should work perfectly.
I do wonder though if these problems only started after installing the Omega drivers.
How was it when running on the standard ATI Catalyst drivers?
Or haven't you even tried those?
If you haven't tried Catalyst, I would ask you to fully uninstall the Omega ones, and install Catalyst instead from the ATI website since these are official drivers, and so should work fine, and also the Omega drivers might have a problem if interfering drivers are a concern.
So you might as well try that before carrying on, but you could anyway to see if you can fix it.
Go into BIOS (f8 at bootup).
I'm not too sure about this but there should be somewhere in one of the above menus about AGP bus speeds, and if you find it, try upping it to 8x now.
If you haven't tried this before, you might have found the problem if you were trying to force the card to run at that speed while in Windows, since Omega gives you alot more options that the original Catalyst wouldn't.
Then get to the main menu of the BIOS and Save and Exit to save the settings and reset the PC.
Okay, now if that hasn't worked (hasn't automatically switched) go to the display properties of the video card.
Right click the desktop, Properties, Settings tab, Advanced button.
Now, try going to Troubleshoot tab (hopefully won't be that different with omega) when you get to the real video settings, and check that full hardware settings are set full on.
Now go to VPU Recover (again, hopefully the same), and turn this setting on which will try to just reset the video card if something goes wrong instead of your computer.
I might be wrong, but I think Omega has a tab for AGP settings as well. Check what thats running at. It might have been the bios making it be forced to run slower.
Now, if all those are alright, and yor still running on the Omega drivers, i'd switch if you haven't already and try those.
I wouldn't expect it to be anything wrong with the hardware on the computer itself.
Now what happens?
I hope this helps