It seems like we might have found a work-around which will solve the system crash on intel-based macs using the ATI X1600 graphics card. Use it at your own risk, of course.
I do not know how this relates to problems others have experienced, but feel free to try. Maybe it is a magic cure for all.
As has been mentioned before, the crash problems on X1600 graphics cards is most likely caused by a driver bug. However, by disabeling some of the shader capabilities, it appears like we are able to avoid the offending code. More specifically:
1) Open the file psclient.cfg in a text editor.
2) Add the following two lines to the end of that file:
Video.OpenGL.Shader.Cg.Enable.Fragment=false
Video.OpenGL.Shader.Cg.Enable.Vertex=false
3) Save the file, and hope for the best.
Thanks to Iriss for patiently testing my various attempts before arriving at this one.
I hope it works for others too.