I don't think that will work, you need a transcoder. I was looking at one just the other day, a little low-profile box with VGA in and HD component out; being an active device, it needs a power supply. It may have been in the "Hardware for sale" section here at HTF.
I have that Audio Authority 9A60 box. Bought it in 2001 I think. It works. I have two in fact - the first one broke, and they sent me a new one. The UPS (those evil brown shirts) people charged me $40 just to pick it up, but thankfully Audio Authority picked up the tab on both deliveries - I hope they have other shipping options for Canadians now.
Fortunately, my friend is very good with electronics and was able to fix the broken one - I think the potentiometer inside it broke. I let him keep it.
I am not sure the quality is that great - it's good, but there is some softening going on. Brightness seems a little low too, but maybe that is a display calibration issue. One day I'll investigate this. I don't use mine anymore since I got my projector with DVI input.
That requires a DVI-I output from your graphics card. Do you have one? If not, it won't work for you -- I suspect adding on a VGA-to-DVI-A adapter won't help much. It probably requires the ATi card and drivers to putput a YPrPb signal from the analog part of the DVI-I connector instead of the standard RGBHV. Seriously, you need a transcoder like the one I mentioned. Just a passive adapter won't work, because you're dealing with a change in the form of the signal.
I think I shall get one of those ATI adapters for my 9800pro/HDTV Wonder combo and resurrect my desktop in a Silverstone LC03 case as a HTPC Yay for me?