From my vantage point which was quite close to the police line at the time a long wait
suddenly transformed into chaos, the clash began with a clear and quite concerted attack by the police using teargas on a diverse crowd. Clashes on the street continued for some hours afterwards. The People's Guelaguetza was relocated to the inadequately small, and therefore quite packed Plaza de la Danza, where many thousands watched performances and messages of solidarity throughout the state.

You can find reasonably reliable information on the
overall events here:
http://www.narconews.com/Issue46/article2735.html
http://nyc.indymedia.org/es/index.html
An appeal with details is at:
http://nyc.indymedia.org/es/2007/07/88395.html

Worth noting from an eyewitness: While the crowd of people was eagerly
shouting for the right to attend, verbally berating the cops at times
(as well as telling them they shouldn't fight for the corrupt governor
Ulises Ruiz Ortiz), and sustained many chants of "Advance, Advance",
from my vantage point there was no physical aggression on their part.
Reporters from Milenio, a major Mexican newspaper, confirmed in print
today that the clash began with one cop responding physically to a
verbal insult from one protester ("¡Eres un perro, un asesino de
Ulises Ruíz!"/"You are a dog, a killer for Ulises Ruiz!"). See Milenio
(Español): http://www.milenio.com/index.php/2007/07/17/94316/ However,
the initial police assault did not have the character of an expanding
clash, but rather the concerted concentration of cops behind the front
lines into the center and the synchronized unleashing of teargas.

Please note that initial reports of a protester dying as a result
internal injuries due to a teargas cannister are also false, despite
the use of the word "confirmed" in some headlines.