SD card formatted to ext4 and permissions I'm using CyanogenMod 7.1.0 RC1 on HTC Desire HD. I've formatted SD card to ext4, because I wanted to use Fedora through chrooting  into it, and Fedora ARM image requires FS which can do symlinks.

Now, when various applications try to save data (reading works fine) on SD, they get permission denied (so, for example, downloads don't work, camera can't save images, etc.). I've chmoded everything on my SD card to 777, but that didn't help (I don't really understand why, as a guy with strong Linux background I've assumed that this would make it readable to everyone).
I've also tried fixing permissions through ROM Manager, but this feature seems not to care about SD card.
All files on SD card seem to be owned by root:root.

Now, how do I make my SD card usable again? Should I format it back to FAT?
You can't have the full SD card formatted as ext4.  Android only natively supports FAT / FAT32.  The primary partition should be FAT, and you can use a secondary partition with ext4 only if you install an app for it like Simple2Ext.