I decided to download and install the AMD Legacy Catalyst driver 12.6 from AMD's website. I ran the .run file and the GUI below in the second image appeared and I install it that way.

On reboot, I saw the below first image, though I managed to open Firefox by Open the pictures by right click Open As. No windows, buttons, or launcher / environment.

It took some time but I figured out how to remove the driver and got back to normal on the default open source drivers I had before. Purged the old drivers and reconfigured xorg to make sure.

How should I be going about installing the AMD made drivers? Is it even compatible with Ubuntu 12.10 yet? And if so would I even need it for 3D heavy applications like Team Fortress 2, or other game applications?

I didn't install Ubuntu just for Steam, I've been using it on and off for a few years. Valve has mentioned that they are working on graphics drivers with NVIDA, AMD, and Intel. Nvidia released their new driver on Steam Linux beta release. Is AMD supposed to also have a new driver coming out soon?

I'm using an ATi Radeon HD 4850 1GB.

My entire desktop after install the proprietary drivers - http://i.stack.imgur.com/jTbQz.jpg

GUI for the AMD Catalyst install - http://i.stack.imgur.com/UkYWn.png