So the cpio archive could be a way to go.
Then it comes to what exactly is needed to setup a prerootfs to boot from.
The multiboot script creates loads of device nodes and insmods many modules. I guess this can be simplified.

I think we only need /dev/console and the mmcblk devices and only need to load the ext2 module to access the real root filesystem.
All other stuff should be done by the init command on the real root filesystem.

Or am I missing something.