Dude aske for a "s-video to coaxial converter". I assumed he meant S-Vid to Composite, since converting into RF would be even worse.
I assumed he meant RF because he'd already tried composite and said it was blurry. Plus, it is common to refer to RF as "coaxial" while I've never heard anyone refer to composite as such even though composite cables are technically constructed with coaxial cable, same as RF cables are. That may be a regional thing though, but around here people usually refer to composite as "RCA".
And you are right that RF would be worse.
Since his problem with the composite-out on his ATI card was that of blurriness, an S-video --> composite cable would give him the same thing. The problem that you had with your ATI card was a color encoding issue. Evidently the composite-out on your card only offered one color encoding scheme (most likely NTSC) while the S-video out offered multiple color encoding schemes, including the PAL that you needed. If your problem with composite had been blurriness, it would not have been fixed by using an S-video --> composite cable.
Regardless of all that, getting a new TV with an S-video input is definitely his best bet.