I'm not sure if you missed a step or two; but two things I had to change to get this to work for me (Thanks btw, this was a lifesaver)

I created the two mounts in the /mnt/ directory, w/o them it didn't seem to want to mount.
So /mnt/mtdblock4 & /mnt/mmcblk0p1 where created with the same 755 privs and owner as the existing "new_root" directory in the myinitfs directory.

The mount command was set to:
mount -t vfat -o rw,nodev,nosuid,utf8,uid=29999,shortname=mixed,dma sk=0000,fmask=0000 /dev/mmcblk0p1 /mnt/mmcblk0p1

Since it was a card formatted with FAT32


Nathan